Shell declares force majeure in Nigeria

Royal Dutch Shell says its local unit has declared force majeure on supplies to a liquefied natural gas plant in Nigeria because of a leak.

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Johannesburg - Royal Dutch Shell said its local unit has declared force majeure on supplies to a liquefied natural gas plant in Nigeria because of a leak, potentially exacerbating a decline in exports for the OPEC member that’s suffering from militant attacks on energy infrastructure.

“The pipeline has been shut down for a joint investigation visit into the cause of the leak and repairs,” Natasha Obank, a Shell spokeswoman, said in a statement. The leak occurred on the Eastern Gas Gathering System, or EGGS-1, pipeline which supplies the bulk of Shell’s gas to the Nigeria LNG plant on Bonny Island. Some supply continues through other pipelines, Shell said.

Nigeria’s government has resumed payments to former militants and is attempting to establish talks to end attacks on pipeline infrastructure in the oil-rich Niger Delta that has sunk crude production to almost a 30-year low. Output has fallen to 1.4 million barrels a day, Minister of State for Petroleum Resources Emmanuel Kachikwu said earlier this month.

Any reduction in LNG exports would be a blow to a country already suffering the economic effects of low oil prices and militant attacks. The NLNG project has a capacity to process 22 million metric tons a year of the liquefied fuel - about 7 percent of world supply - and 5 million tons of natural gas liquids, according to a Shell website. The Nigerian National Petroleum holds a 49 percent share and Shell has 25.6 percent.

BLOOMBERG