There are indications that Nigeria may be losing about $15.8million daily due to the recent Force Majeure declared by oil major, Shell Nigeria Plc.
The said loss is coming on the heels of the country’s inability to export 200,000 barrel of crude oil daily as a result of the closure of the facility as oil price rose to $79.15 per barrel on Tuesday.
Analysis of the global oil prices revealed that Brent crude rose by 55 cents, or 0.7 per cent to $79.15 a barrel after hitting a season high of $79.85. on Tuesday. Similarly, the U.S. West Texas Intermediate (WTI) crude also gained 73 cents, or 1 per cent to trade at $76.30, after rising to $76.92. Both contracts reportedly traded at their highest in a month.
The price gain came despite the rapid spread of the Omicron coronavirus variant, supported by supply shortages and the reality of the fall of U.S. inventories last week.
Production disruptions in two other countries, Ecuador and Libya have also caused supply hiccups in the international oil market prompting prices to extend gains on Tuesday.
However, Nigeria seems not to be making the maximum benefits from the rising prices because of the shortage in production as about 200,000 is stranded due to the Force Majeure by major Shell Plc.
A continued delay in the restoration of the facility could cost the country $474.9million in a month at the current price.
The shutdown of the Forcados export terminal comes just a month after Shell said it was restoring flows from the nearby Bonny facility.
The action is considered another blow to Nigeria which has struggled to stem falling production.
Shell Petroleum Development Co. of Nigeria Ltd issued a notice of force majeure on Forcados shipments, effective from midday on December 21, and plans to issue a revised offtake program in due course.
More than 200,000 barrels a day of Nigerian crude normally pass through the terminal.
Force majeure is a clause that allows companies to skip contractual obligations following issues outside of their control.
The stoppage occurred during replacement of one of the two single point moorings at Forcados, with the positioning of a jack-up barge preventing tanker access, export operations and resumption of full production into the terminal, Nigerian National Petroleum Corp. said in a notice.
The presence of the jack-up offshore support vessel Seacor Strength at the Forcados moorings was confirmed by ship tracking data monitored by Bloomberg.
Neither the Nigerian National Petroleum Company Limited (NNPC) nor Shell gave an indication of the likely duration of the stoppage. The force majeure suggests it will be long enough to affect four remaining cargoes that a port agent report seen by Bloomberg shows are due to be loaded this month.
Since Shell announced the month-long force majeure at the Bonny site in October, only one ship has loaded a cargo from that terminal.
Presently, Nigeria, Libya and Ecuador have declared force majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.