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Bombed pipeline to halt Nigeria’s crude oil output until May

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By Maggie Fick in Lagos and Anjli Raval in London

The damage caused by an attack on an underwater pipeline is set to halt flows of Nigeria’s Forcados crude oil to one of the country’s biggest export terminals until May.

Shell Petroleum Development Corporation , a Royal Dutch Shell subsidiary which operates the pipeline, declared force majeure on February 21, a week after the pipeline was hit by an explosion, causing a leak that forced it to halt loadings to the Forcados export terminal.

Repairs to the pipeline could take until May, Emmanuel Ibe Kachikwu, minister of state for petroleum and the head of Nigeria’s oil company, said in Abuja on Tuesday.

The bombing of the pipeline was the most sophisticated attack on Nigeria’s oil-producing Delta in years and raised fears that such sabotage could once again cripple output in Africa’s top oil producer.

“I have been assured by Shell that in six to eight weeks, we will be back,” said Mr Kachikwu.

One person briefed by the SPDC told the Financial Times: “The earliest the line could be back up with replacements and parts flown in [to Nigeria] is mid-May.”

As a result of the oil spill, inflows to the terminal and exports out were stopped.

Almost 250,000 barrels a day of oil were scheduled to be exported from the Forcados stream in both February and March. The Forcados terminal has the capacity to export about 400,000 b/d, according to people familiar with the matter.

The incident has curbed production — which was previously at 2.3m b/d — by 300,000 b/d, Mr Kachikwu said. Nigeria had a target of 2.4m b/d for 2016.

At the peak of the previous Delta conflict, Nigeria’s output was cut in half.

The attack is suspected to have been carried out by militants who deployed divers, according to western security experts and diplomats. 300,000

Barrels a day lost to the attack

Shell said: “The process of gathering information to fully establish the cause of the spill is ongoing with the involvement of communities and regulators as required.”

Following the attack, Shell sent a team from Aberdeen in Scotland to assess the damage on the Trans Forcados pipeline that moves crude to the export terminal, the person briefed by the operator said.

The hit to Nigeria’s production and exports comes as the country grapples with a crude price collapse that has shrunk government income. Oil exports generate about two-thirds of its revenues and about 90 per cent of foreign earnings.

The outage in Nigeria, alongside one in Iraq, has provided some support to the Brent crude price which has rebounded to above $40 a barrel in recent days from the lows reached in January, of less than $30 a barrel.

“It looks like a military type explosive charge [was used]. The people who did this knew what they were doing and they wanted maximum damage.”– Person close to SPDC

Pipeline attacks were common during the insurgency in the Niger Delta that ended in 2009 after the government extended an amnesty to rebels who agreed to put down their weapons in exchange for monthly payments and, in some cases, lucrative contracts for guarding the pipelines.

Though the programme has been extended through this year, the new government of Muhammadu Buhari, the president, regards it as a potential vehicle for corruption that cannot be continued indefinitely.

It is unclear who was behind the attack. The person briefed by SPDC said the perpetrators were highly skilled. “It looks like a military type explosive charge [was used]”, he said. “The people who did this knew what they were doing and they wanted maximum damage.”

The attack comes after two pipeline bombings in January just days after a former militant leader was charged by the federal anti-corruption agency with money laundering and collusion with the national maritime authority to siphon off N34bn ($170.6m) in state funds. The powerful ex-commander, known as TomPolo, has denied the charges against him.

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