Shell declares force majeure on gas supply to NLNG

Royal Dutch Shell Plc said its local unit in Nigeria, Shell Petroleum Development Company of Nigeria Ltd (SPDC), has declared force majeure on supplies to a liquefied natural gas plant owned by the Nigerian Liquefied Natural Gas limited, NLNG.

According to the company, the reason behind the force majeure, was because of “a leak,” causing a decline in exports.

“The pipeline has been shut down for a joint investigation visit into the cause of the leak and repairs,” Natasha Obank, Shell spokeswoman said in a statement on Wednesday.

Report said 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.

However, some supply continues through other pipelines, Shell said.

The Federal Government 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.

Earlier this month, Minister of State for Petroleum Resources, Ibe Kachikwu, said output had fallen to 1.4 million barrels a day.

Experts say any reduction in LNG exports would be a blow to Nigeria as it is 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 Shell’s website.

The Nigerian National Petroleum Corporation, NNPC, holds 49 percent share and Shell has 25.6 percent. Total LNG Nigeria Limited holds 15 per cent while Eni International (N.A,) N. V. S. a. r. l holds 10.4 per cent.

This report comes on the heels of NNPC’s newest release that Nigeria’s gas supply to power plants between the period of July 2015 and June 2016 averaged 650.39 mmscfd, or 65.58 percent.

According to the report, for the period July 2015 and June 2016, an average of 991.72 mmscf/d of gas was supplied to the domestic market, an average of 650.39 mmscf/d, or 65.58 percent as gas supply to the power plants and 341.32 mmscfd, or 34.42 per cent as gas supply to industries.

A total of 363.19 billion cubic feet (BCF) of gas was supplied for domestic use during the period, while 1,219.49 BCF was exported.

Out of the 212.58 BCF of gas produced in June 2016, a total of 115.88 BCF was commercialised, comprising of 16.50 BCF and 99.38 BCF for the domestic and export market respectively.

This means an average daily supply of 550.10 mmscf/d of gas to the domestic market and 3,312.40 mmscfd of gas supplied to the export market, with about 54.51 per cent of the total gas produced commercialised and the balance of 45.49 per cent either re-injected, was used as upstream fuel gas or flared.