Why force majeure has not been declared on trans Forcados pipeline

by | May 17, 2018 12:30 am

Industry operators have given an insight as to why a force majeure has not been declared by Shell Petroleum Development Company (SPDC) the operators of the Forcados export terminal since the shutting down of the pipeline nine days ago.
The Trans-Forcados pipeline is the major trunk line in the Forcados Pipeline System with an export capacity of 400,000b/d and the second largest network in the Niger Delta which services mainly operators in the western Niger Delta.
According to some stakeholders that spoke to BusinessDay last night , they said even though they know that Shell has sent letters concerning the situation to concerned stakeholders about the changes in loading schedule at the terminal they however they don’t know what consideration the multinational oil giant is having that has made it hesitant in declaring force majeure in respect of an incident that has resulted in the loss of about 240,000 barrels of crude oil per day.
Force majeure is Standard clause found in construction and supply contracts, it exempts the contracting parties from fulfilling their contractual obligations for causes that could not be anticipated and/or are beyond their control.
But a source with fair knowledge of how the facility works told BusinessDay that Shell can only take such an action if the actual operators of the trunk line , in this case Heritage oil decided to declare force majeure, by stating that it cannot convey the crude through the pipeline to the terminal for reasons beyond its control.
He however stated that the Trans Forcados trunk line is not the only one servicing the Forcados terminal. He said if trunk lines like Trans Escravos and Ramos are not affected by this action it may not be necessary to declare force majeure.
He also said that declaring force majeure would be a bad signal for some of the oil operators that use the trunk line as their investors may begin to query the security of their investment. Some of the users of the line that Business Day tried to reach refused to comment on this development.
However an operator of one of the oil fields that also evacuates crude through the pipeline said that there has not been any production activities since the incident.
The companies affected by the incident are Shell Petroleum Development Company (SPDC),Seplat Petroleum Development Company Plc, Shoreline Resources Limited, Neconde, First Hydrocarbon Nigeria (FHN) and NPDC. Some marginal field producers such as Pillar Oil, Midwestern Oil and Gas, Platform Petroleum and Energia also convey their crude oil through the pipeline.