Shell Declares Force Majeure On Gas Supplies To Nigeria

Shell-petroleumShell Petroleum Development Company has declared force majeure (FM) on gas supplies to the Nigeria Liquefied Natural Gas (LNG) export facility on Bonny Island.

“The Shell Petroleum Development Company of Nigeria Ltd (SPDC) declared force majeure on gas supply to NLNG on 8 August 2016, following a leak on the Eastern Gas Gathering System (EGGS-1) pipeline through which it supplies the bulk of its gas to NLNG,” a spokesman toldĀ Reuters in an emailed statement.

SPDC, Royal Dutch Shell’s Nigerian unit, is a joint venture with state oil company Nigerian National Petroleum Corporation (NNPC). They supply gas to the LNG plant.

The declaration may impact exports from the facility, which is situated near Port Harcourt, Rivers State.

“The pipeline has been shut down for a joint investigation visit into the cause of the leak and repairs,” the spokesman said, adding that SPDC continues to supply gas to the facility through other pipelines.

NLNG, set up 16 years ago to export gas, is owned by NNPC, Shell, Total and Eni.

It has the capacity to produce 22 million tonnes of LNG a year and has long-term supply contracts with Italy’s Enel , Shell, France’s Engie SA and Portugal’s Galp, among others. It also sells on the spot market.

Down more than two-thirds from 2014 levels, spot LNG prices have been rising in recent months due to production outages in Angola and Australia.

The rally ran out of steam last week and prices declined sharply as Chevron’s Gorgon LNG project resumed production, but potentially lower output from Nigeria LNG may again tighten supply.