Nigeria's Forcados Oil Pipeline Resumes after One-week Shutdown

Source: Reuters 1/26/2014, Location: Africa

Nigeria resumed operations on its Trans Forcados oil pipeline, a senior oil official said on Monday, bringing back on stream part of the network whose closure also led to a near halving of the country's gas production.

The pipeline, which had been shut for a week due to sabotage, resumed on Saturday afternoon, David Ige, executive director of gas and power at Nigerian National Petroleum Corp, told Reuters.

It transports the Forcados crude oil grade in the delta region and was scheduled to export about 260,000 barrels per day in January and 210,000 bpd in February.

The west African crude market is already oversupplied, so the resumption had little immediate impact on prices.

The outage also halted a significant part of Nigeria's natural gas production. Gas fields had to be shut down because the condensate they produce alongside the gas is normally evacuated via Forcados.

"Forcados is a major artery...when this pipeline is out we lose gas production. (It) accounts for 40-50 percent of gas production in the country," Ige said.

Each time the pipeline goes down, two power plants also lose input and electricity supplies for the east of the country are affected, he said.

London and Lagos listed Nigerian producer Seplat, Nigeria's Panocean and NNPC's Nigeria's National Petroleum Development Co subsidiary (NPDC) produce oil for the pipeline. A small alternative route exists through the Warri refinery but its capacity is small, meaning backlogs build up after a few days, Ige said.

Separately, Royal Dutch Shell said its 150,000 bpd Nembe Creek oil pipeline, which carries Bonny Light crude, was still shut. A leak was detected and the line was closed on Jan. 17, a spokeswoman for the firm said. The line is operated by Shell's Nigerian joint venture SPDC.

SPDC also contributes to Forcados' exports but at a different point closer to the Forcados' oil terminal.

Ige said the country produces around 8 billion cubic feet per day of gas, of which 1.9 bcf/day is allocated for domestic consumption.

Almost 4 bcf/day is exported via the west African gas pipeline and as liquefied natural gas (LNG), with a portion used to balance operations. About 0.8 bcf/day is flared.

Seplat increased its Nigerian oil production to 76,000 bpd in December and transported the majority of its crude via the Forcados pipeline, a spokeswoman for the company said without commenting on the status of the fields.

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