Crude loading delays at Nigeria’s Forcados oil terminal

Market: Crude oil
20/04/23

Loadings of Nigeria's medium sweet Forcados crude grade are being significantly delayed by production issues, according to market participants.

The April loading programme is running two weeks behind schedule and May loading dates are being postponed by up to seven days, traders said. The delays follow a sharp drop in the amount of crude arriving at the Shell-operated Forcados export terminal in recent weeks.

Figures from Nigeria's upstream regulator NUPRC show receipts at the terminal fell by 25pc on the month to 185,000 b/d in March. Separately, a document seen by Argus shows the terminal received 190,000 b/d in the first two weeks of this month, down from 220,000 b/d and 260,000 b/d in the corresponding periods of March and February. The decline is reflected in the April loading programme, which puts Forcados exports at just 152,000 b/d this month. May exports are scheduled to rise to 254,000 b/d.

A source told Argus the drop in pipeline flows to the terminal last month was party because of a production shutdown at the OML 34 and 65 licences. The underlying problem is crude theft from pipelines, according to SPDC managing director Osagie Okunbor.

"We are struggling to catch up with our repairs programme vis-à-vis new attempts to install [illegal connections on our pipelines], so we are almost losing the battle," Okunbor said. "I think the statistics my people gave me recently was something like two [new illegal connections] per day."

Persistent incidents of pipeline sabotage and oil theft have become an enduring problem for Shell and other operators in Nigeria's Niger delta region, despite repeated government crackdowns. Shell said in 2021 that it was reconsidering its position in the country's onshore oil sector because of the constant security challenges.

Forcados exports had to be halted between mid-July and mid-October last year after vandalism and oil theft severely damaged the pipeline feeding the terminal. The latest issues with Forcados coincide with strike action by ExxonMobil staff in Nigeria, which has led the company to declare force majeure on exports of four other Nigerian crude grades.

Nigeria was already struggling to meet its Opec+ crude output quota. NUPRC put Nigerian crude production at 1.27mn b/d in March, down by 3pc from February and 470,000 b/d below its current Opec+ target. Argus estimates that Nigeria produced 1.47mn b/d of crude last month. The discrepancy with NUPRC's figure is partly down to the Nigerian government classifying the Agbami grade as a condensate.

By Adebiyi Olusolape and Gulio Bajona

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