Shell’s Bonny Light Terminal Flowing Again
Following two months of being off line, Shell’s Bonny Light terminal is back pumping oil in the Niger Delta after being dragged into a conflict between the Nigerian government and militants who were intent on cutting off on the country’s most vital commodity. Those militants had been asking for larger payments that have essentially served as protection money in return for not attacking the terminals.
Prior to the resumption of production on July 4 and the exporting of it three days later, Shell’s infrastructure had been under attack. That led to a stretch where production for the entire country was virtually cut in half from a maximum of 1.85 million barrels every day to roughly one million.
The Bonny Light terminal is capable of producing over 10 percent of that amount, though it’s far from the only terminal that’s become a pawn of this heated political fight. The Forcados can produce twice the amount of Bonny Light, but a pipeline leak has plagued them as well.
The difference between the two terminals is that the Forcados remains under the legal doctrine of force majeure, while Bonny Light is no longer protected in that manner. In laymen’s terms, Shell avoids breaching oil contracts in place if issues related to their inability to fulfil the contract are out of their hands.
The situation that began in early May was partly responsible for a brief oil price spike after having dropped over the past two years. From a credibility and financial perspective, the issue has caused major problems in the country.
The reason is that Nigeria is no longer the biggest oil producer in Africa and the shutdown helped put a severe dent in a product that provides government with 70 percent of its yearly overall revenue