Shell declares force majeure on Bonny Light exports
Shell Petroleum Development Company of Nigeria Limited has declared force majeure on exports of Bonny Light crude, one of the country’s major sources of oil revenue.
Force majeure is a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
Reuters quoted traders as saying that a surplus of unsold cargoes was so large that differentials struggled to hold steady.
The SPDC, the Nigerian subsidiary of Royal Dutch Shell, said on Thursday it had declared force majeure on Bonny shipments with immediate effect.
It said the shutdown of the Nembe Creek Trunk Line had prompted the force majeure.
Exports of Bonny Light are expected to run at around 195,000 barrels per day next month.
According to traders, only one tanker is scheduled to load Bonny Light crude over the next two weeks.
Shipments of Erha crude were also said to be delayed, but this had not yet had a knock-on upward effect on prices of other grades, two traders said.
Prior to the declaration of force majeure on Bonny Light exports, the nation’s crude shipments were already witnessing delays following a leak on the 200,000 to 240,000 bpd Trans-Forcados pipeline that shut down earlier this week, effectively cutting deliveries of Forcados, the country’s largest crude grade.
Trans-Forcados pipeline was shut down after a leak was found. Repairs are on-going.
About 25 cargoes of June-loading Nigerian cargoes were still available, although traders said around half of that total were held by Total and Shell.
Indonesian Pertamina’s tender for July 8-10 delivery and July 23-27 delivery closed on Thursday.
Pertamina has another tender for August 1-10 or 16-20 or early September delivery closing on Monday.
Meanwhile, the world’s three largest oil traders are competing to buy the African arm of Brazil’s Petrobras that owns stakes in two major Nigerian offshore oil blocks, industry and banking sources with knowledge of the matter have said, after submitting bids earlier this month, according to Reuters.
Last November, state-controlled Petroleo Brasileiro SA, known as Petrobras, launched the sale of 100 per cent of Petrobras Oil & Gas BV, or Petrobras Africa, as part of the heavily-indebted company’s plan to offload $21bn in assets through 2018 as it also faces a massive corruption scandal.
Petrobras holds half the shares in the company, while 40 per cent are held by a subsidiary of Grupo BTG Pactual SA and 10 per cent by Helios Investment Partners.
Bankers have previously estimated the value of the Petrobras venture to be about $2bn.
The venture has stakes in two offshore blocks that contain two producing fields, the major Agbami field in Oil Mining Lease 127, operated by a local Chevron affiliate, and the Akpo field in OML 130 operated by Total SA.
The sale has attracted the top trading firms, which are always on the hunt for long-term crude supplies. Mercuria and BP had also its potential.
In early May, three consortia including the major trading companies submitted bids to buy Petrobras Africa.
Vitol bid together with the oil upstream subsidiary of United States private equity firm Warburg Pincus called Delonex and Canadian-listed Africa Energy Corp, an oil and gas exploration firm that is part of Sweden’s Lundin Group.
Glencore joined with Nigerian listed firm, Seplat, and French firm, Maurel & Prom, that is majority-owned by the Indonesian government. Indonesia’s state oil firm, Pertamina, also backs Maurel & Prom and owns a 20 per cent stake in Seplat.
The third bidder was privately-held Famfa Oil, together with Royal Dutch Shell.
Famfa Oil is one of the concessionaires in the operator of the Agbami oil field along with Chevron, Statoil and Petrobras. Chevron holds the majority stake.
Vitol, Glencore, Shell, Africa Energy declined to comment. Maurel, Famfa and Seplat did not respond to requests for comment.
Petrobras is expected to make a decision by the end of May. But the sources said that this could slide as there was still a possibility that the bids might be split between the two oil block stakes.
Agbami produces about 240,000 bpd, while the Akpo field in OML 130 produces nearly 130,000 bpd, with a second field, Egina, due to come on stream in the same block later this year.