Oil fortunes still did not brighten on Thursday. Shell announced the temporary closure of its Soku gas plant in Rivers State to repair pipelines damaged by vandals who steal condensate.
Up in Abuja, former Organisation of Petroleum Exporting Countries (OPEC) President and former Petroleum Minister, Rilwanu Lukman, warned Senators not to expect an early pick up in the price of oil that is being pushed down by several forces, to the discomfort of the country’s budget planners.
Shell declared a force majeure on gas supply to the Nigeria Liquefied Natural Gas Limited (NLNG) for the duration of the shut down.
The closure of the plant, which accounts for some 40 per cent of gas supplies to the NLNG plant on Bonny Island, Rivers State, has also resulted in the issuance of a force majeure by the NLNG to inform its customers of disruption in its supply. Force majeure is issued by a company to its customers to indemnify it from liabilities as a result of its inability to meet obligations, arising from a disruption of operations caused by unforeseen developments.
A statement issued by Shell Head of Media/Communications, Tony Okenedo, recounted that in recent months the number of illegal connections on pipelines has increased significantly, encroaching on the Soku plant itself, and increasing safety risks to an unacceptable level.
"To ensure the safety and security of staff, contractor staff and communities, urgent repair work must be carried out immediately on the pipelines outside of the perimeter of the plant," it stressed.
"To do this safely, the plant must be shut down."
Shell will also clean up nearby environmental damage caused by condensate spilled in these illegal operations.
Its Managing Director Mutiu Sunmonu, maintained that "our first responsibility is for the health and safety of our staff and our neighbours. The level of theft from this pipeline has meant we had to remove more than 50 illegal valves in August and September alone.
"Over the last few weeks the situation has deteriorated rapidly and resulted in a situation where safety concerns dictated we had to shut in.
"We also approached a stage where we have questions regarding the integrity of the pipeline which we will check."
Shell is Nigeria’s largest oil and gas company.
It operates a joint venture in which the government, through the Nigerian National Petroleum Corporation (NNPC), holds 55 per cent, Shell 30 per cent, Elf (a subsidiary of Total) 10 per cent, and Agip five per cent.
NLNG General Manager (External Relations), Sienne Allwell Brown, also issued a statement which confirmed that as a result of "the declaration of a force majeure by Shell, Nigeria LNG has similarly notified its buyers that it will be unable to meet all its obligations because of the impact of the shut down."
But she assured the operations of NLNG would not experience any major disruption as it is committed to making the optimum use of the available feed-gas received from other suppliers.
Lukman, a two-term OPEC President and Secretary General, two-term Petroleum Minister, made his own point during his screening in the Senate for a Ministerial job.
He reiterated that the global financial meltdown would continue to affect the price of crude until the trend is halted, stressing that the price drop is not entirely due to the forces of supply and demand, it is because the international economy is in trouble.
In his view, the United States and European Governments have had to bail out their financial institutions from the economic crises, and as long as this practice continues, the demand for oil will continue to slacken.
"But if these countries go on with the bail out plans, oil price may rally. However it won’t be anytime soon," warned Lukman, who was Petroleum and Energy Adviser to former President Olusegun Obasanjo administration and is now Honorary Strategic Adviser to Yar’Adua on Energy Matters.
He said Nigerian would continue to import fuel unless the vandalisation of pipelines in the Niger Delta is checked.