- OPEC January output drops on new cuts, Libyan unrest
Chika Amanze-Nwachuku with agency report
The Shell Petroleum Development Company of Nigeria Ltd (SPDC) on Friday lifted a force majeure on Bonny Light crude oil exports, Nigeria’s major oil revenue source.
The Royal Dutch Shell’s Nigerian subsidiary, on January 20, shut down the Nembe Creek Trunk Line (NCTL) and declared a force majeure on exports of the Bonny Light crude, following attacks on the oil pipeline by vandals.
Force majeure is a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances. A Reuters report yesterday quoted an unnamed Shell spokesman to have confirmed the development. Aiteo had announced repairs were completed on Tuesday.
Bonny Light, one of Nigeria’s key export grades, is desired grade among refiners globally owing to its low sulfur. Other grades of Nigerian crude oil are Qua Iboe crude oil, Brass River crude oil, and Forcados crude oil.
Recurrent vandalism of the NCTL has led to significant losses in production, Aiteo Eastern Exploration and Development Limited said recently.
The firm noted that “impact on production has created revenue deficits that directly impact all the stakeholders, pointing out that between May last year and January this year alone, the NCTL, which exports Bonny Light crude oil, had been shut down more than four times owing to attacks by vandals.
“Over the last four years, more than 200 shut down days have been recorded on the asset,” the firm said in November.
Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) oil output plunged in January to a multi-year low as top exporter Saudi Arabia and other Gulf members overdelivered on a new production-limiting accord and Libyan supply dropped due to a blockade of ports and oilfields, a Reuters survey found.
On average, the 13-member organisation pumped 28.35 million barrels per day (bpd) this month, according to the survey. That is down 640,000 bpd from December’s revised figure.
Despite the drop in supply, crude prices have slipped to below $60 a barrel on concern that the coronavirus outbreak could cut China’s oil demand. This has prompted OPEC and its allies to discuss holding an early meeting and taking further steps to support the market.
OPEC, Russia and other allies, known as OPEC+, agreed to deepen an existing supply cut by 500,000 bpd from January 1, 2020. OPEC’s share of the new reduction is about 1.17 million bpd, to be made by 10 members, all except Iran, Libya and Venezuela.