Nigeria replaces broken pipeline with small tankers

Nigeria is turning to a fleet of small river tankers to boost its oil production after one of its key pipelines has been down for months.

Africa’s biggest producer, seeking to boost production before OPEC decides on new oil output quotas, has started using small vessels to take a new type of oil, Nembe Creek, up the Niger Delta and onto an ocean liner docked alongside the nation’s coast.

The same oil previously went through the main Nembe Creek pipeline to the Shell Plc-operated Bonny Terminal.

That pipeline, operated by Aiteo Group and previously operating at about 150,000 bpd, has not sent oil to Bonny since February 2022, people familiar with the matter said. Bonny is also fed from another pipeline and this flow continues.

Although the rerouting reduces overall shipments from Bonny, it should not affect Shell’s stake in Nigerian oil. Shell sold the pipeline to Aiteu in 2015.

The new logistics setup uses a floating storage and offloading ship called the Galilean 7, which is docked near the Brass Terminal, according to a terminal fact sheet seen by Bloomberg.

Transporting Nembe Creek oil, which is owned by Nigeria and Aite, is a significantly more expensive method than by pipeline.

The depth of the river limits the size of ships that can navigate it, meaning it takes about 24 individual deliveries to get enough oil to fill a standard ocean liner.

A Shell spokesman declined to comment. Aiteo and NNPC did not immediately respond to requests for comment.

The 1 million bbl Suezmax tanker Maran Orpheus lifted the first cargo of the new stage from the Nembe Creek terminal on Oct. 10, 2023, according to tanker tracking data compiled by Bloomberg.

Nigeria is expected to load about 65,000 bpd of the new Nembe Creek class this month and next, according to export loading schedules seen by Bloomberg. This would offset most but not all of the reduction in flows from Bonny.

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