Connect with us
Advertise With Us


Economic Impact Of Trending Force Majeure In Nigeria’s Oil, Gas Sector



The Nigerian economy appears to be facing a new threat as oil companies operating in the Niger Delta continue to face fresh opposition to crude oil export. This trend may impact projections negatively, FESTUS OKOROMADU writes.

Export of crude oil which is the mainstay of the Nigerian economy has come under fresh attack in recent time. For instance in the month of April three major oil companies operating in the Niger Delta declared force majeure, implying their inability to continue operations.

First it was the Aiteo Group, the operators of the Nembe Creek Trunk Line (NCTL), who announced the incident of a fire outbreak on the pipeline.

Interestingly, the Nembe Creek Trunk Line which is a 97 kilometer pipeline, transports about 150,000 barrels of crude oil daily. The Trunk Line is one of country’s major crude oil transportation arteries evacuating crude from the Niger Delta to export terminals in the Atlantic coast.

According to Aiteo’s report, the fire incident which led to the imposition force majeure occurred on April 21, 2019.

A press statement issued by the spokesman of Aiteo Eastern Exploration and Production Company Limited, Ndiana Matthew, noted that the fire incident may have been caused by a third party tampering with the pipeline.

“We have been informed of a fire outbreak by our surveillance team comprising the JTF, FSS around NCTL RoW near Awoba today, 21 April 2019.

“Our Operations Emergency Response team was immediately activated and following its urgent intervention and containment action, we are constrained to shut in injection as well as other related operations into the NCTL.  In accordance with standard procedure, we requested the other injectors to do the same.

“The NCTL has, hitherto, enjoyed smooth operations preceding this incident founding suspicion that this fire may have occurred through an illegitimate, third-party breach of the functionality of the pipeline,” part of the statement reads.

Meanwhile, the company promised to continue with the relevant investigations as it concerns the incident while announcing closure of operations of the pipeline.

A day later, the company issued an update, saying the fire incident earlier reported has been completely put out.

According to the report, a security team conducted further inspections at various times confirms new position.

“In line with regulatory requirements, a Joint Investigation Visit (JIV) comprising security and regulatory agencies, community representatives and Aiteo personnel will be constituted and deployed to the site to attend to the necessary incident formalities.  This team is expected at the incident site imminently,” he stated.

However, the noted that, “The Joint Task Force (JTF) has confirmed that sabotage of the pipeline at Awoba, Rivers State, was responsible. JTF has also identified some culprits and is set to take necessary action.”


Chevron’s Fire Incident

Barely a few days after, another fire incident involving five oil wells, operated by Chevron Nigeria Limited (CNL) at Ajegunle Ikorigho community in Ilaje local council of Ondo State, was reported.

According to some observers the incident came a few weeks after militants threatened to resume hostilities in the oil-rich Niger Delta.

Reports from affected communities said the inferno had been on for seven days and was getting worse as it spread to neighbouring riverine communities before CNL announced the incident.

However, CNL in a statement signed by general manager, Policy Government & Public Affairs, Esimaje Brikinn, dated April 25, 2019, confirmed that there was a fire at its Ojumole Well No 1, but described the well as idle and plugged.

Part of Esimaje’s statement reads, “CNL, operator of the joint venture (JV) between the Nigerian National Petroleum Corporation (NNPC) and CNL (NNPC/CNL JV) confirms that at about 10:00 p.m. on Thursday, April 18, 2019, a fire was observed at the Ojumole Well No. 1, an idle and plugged well with no flowline connected to it. Ojumole field is in NNPC/CNL JV’s Western Niger Delta area of operations.”

Speaking of the actions taken by the company, Esimaje said, “CNL conducted an overflight to evaluate the fire and also mobilised emergency responders to assess the site, contain the fire and boom the area. In addition, CNL notified community stakeholders about the incident and also reported it to the Department of Petroleum Resources (DPR), National Oil Spill Detection and Response Agency (NOSDRA) and other regulatory and security authorities.”

Again, blaming the incident on external factors, Esimaje said, “A joint investigation visit (JIV) to the site of the incident on Saturday April 20, 2019, by a team made up of regulatory agencies, community stakeholders and CNL, determined that the fire incident was caused by third-party interference. There was no impact to any of the neighboring communities.”

CNL further said it was working with contractors to safely put out the fire as quickly as possible, stressing that it remains committed to the safety of the communities and the environment in its areas of operation.

“We continue to conduct our operations safely, reliably and efficiently, with utmost consideration for protection of people and the environment,” Esimaje assured.

Similarly, the international news agency, Reuters on Monday reported that Amenam, operated by oil major, Total , was also under force majeure. Although the report said Total did not immediately respond to a request for comment, trading sources confirmed the development.

In addition, Royal Dutch Shell, was quoted as saying that it has declared force majeure on exports of Nigeria’s Bonny Light crude following the closure of one of two export pipelines, on Monday.



According to Reuters, exports of two the country’s crude grades were currently suffering significant setback due disruptions caused by fore listed incidents.

Both grades of crude are light and sweet, typically suitable for gasoline production.

The report noted that the Bonny Light-exporting Nembe Creek Trunk Line was closed on April 21 following a fire, operator Aiteo said, and Shell said it had declared force majeure on April 25.

Meanwhile, market reports says Bonny Light exports had been planned at 222,000 barrels per day (bpd) in June and 184,000 bpd in May. But due to the shortfall in supply necessitated by the force majeure trading sources said they were awaiting new loading plans.

Reuters further reported that a port source said the oil-well shutdowns had reduced Amenam’s daily production and led to force majeure. Exports of Amenam are typically around 100,000 bpd, and trading sources said loadings had been delayed by roughly 25 days. The economic implications of these developments is that the federal government cannot meet its 2019 budget proposal of crude oil production cum export of 2.3 million barrels per. Thus, revenue expectations from this main driver of national income is bound to record shortfalls.

Therefore, the call made by the chairman of the Nigeria Governors’ Forum, Abdulaziz Yari, charging newly-elected governors to prepare for another cycle of possible economic recession by mid-2020, may not be a false alarm as being perceived in some quarters.

The fact remains that except our leaders start thinking creatively, the rising incidents of disruption of crude oil exports may obviously open the window for another season of recession.

As Yari rightly noted, the federal government as well as the new governors must realise that the years ahead might not be a smooth ride due to paucity of funds, this would further be compounded by the slowing down of crude oil export. Except something urgent is done to reduce the force majeure era in the Nigerian oil and gas sector.