On Wednesday, the Shell Petroleum Development Company of Nigeria, declared force majeure on exports of Bonny Light crude, Nigeria’s largest oil revenue source.
This declaration, may negatively affect the 2020 budgetary revenue projections from the oil sector and by implication, efficiency of the capital budget if it is prolonged.
Force majeure is a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances. A news report by Reuters quoted SPDC spokesman as saying that the force majeure declared on Bonny Light crude oil exports was effective from January 20.
The decision for the declaration came after the shutdown of the Nembe Creek Trunk Line (NCTL) and declaration of a force majeure by the pipeline’s operator, Aiteo.
The NCTL is one of two major pipelines carrying Bonny Light crude to the export terminal.
Bonny Light, one of Nigeria’s key export grades, is popular with refiners globally, with production ranging around 250,000 b/d in the past year. It was not immediately clear how much of this would be impacted by the pipeline shutdown but delays now will ripple through the balance of exports in months to come.