Shell to Stop Repair on Oil Facility in Nigeria

Royal Dutch Shell Plc (NYSE: RDS.A) is conducting repair activities on a key crude oil pipeline that was damaged after the Niger Delta Avengers’ recent attack, according to Bloomberg reports. Sources familiar with the matter state that the repair employees are working under strict security.

Other crude oil facilities and pipelines which are owned by Royal Dutch Shell in the Forcados terminal were also attacked by the group. With this, the repairs were also being undertaken in several sites on the Forcados export pipeline. However, the repair work was stopped during the previous week after another attack against a pipeline that connects onshore storage tanks with an offshore port. The CFO of Shell Mr. Simon Henry said during the annual capital markets day of the firm: “We cannot operate or repair if our people are threatened.”

Royal Dutch Shell, being a foreign energy giant operating in the Delta region, has been one of the targets by the Niger Delta Avengers. A couple of days ago, a Shell Petroleum Development Company of Nigeria oil pipeline was under attack. The Forcados terminal which has been under force majeure since the month of February holds a 250,000 barrels per day capacity sent offline after the radical group’s attacks.

These oil pipeline attacks come in the wake of the Niger Delta Avengers, which are fighting for independence . The strength of this armed group is evident as it is responsible for all the attacks and also warns the energy corporations to leave the Delta region, before conducting the attacks.

According to the armed group, the government of Nigeria is not doing what is necessary to fulfill their demands for a bigger share of profits that are earned by foreign oil companies, such as Royal Dutch Shell and Chevron, in the Delta region. The Nigerian government’s amnesty program, which is inked back in 2009, deprives the citizens of their rights. In addition, the Niger Delta Avengers asserted that the Nigerian government’s amnesty program has been amended only considering the best interest of the energy corporations while neglecting to pay the radical group to protect the installations that they have installed. The amnesty program was intended to provide monetary benefits to militants for job training, but the Nigerian government had slashed these by two thirds.

Just recently, local community leaders partnered with the militants in opposing the Nigerian government. President Muhammadu Buhari, who just assumed office during the previous year, is already facing opposition from a few Christian political individuals because he is Muslim. The Niger Delta Avengers and the community leaders added to the opposition against President Buhari as he cancelled all the pipeline security contracts and lowered monthly stipends. Furthermore, the President was supposed to visit the Delta region for the first time, but he cancelled.

The attacks by the Niger Delta Avengers have significantly hampered the oil output of Nigeria, lowering it to 800,00 barrels a day peaking from 2 million oil barrels. This development came at a time when the country is already facing challenges, such as poverty. About 70 percent of the total revenue of the economy is obtained through oil sales. We believe that if these militant attacks do not come to an end soon, Nigeria will near recession.

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