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Shell Shuts Down Nigerian Oil Pipeline Post Fire Outbreak

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Integrated energy major Royal Dutch Shell plc’s (RDS.A - Free Report) Nigerian division, Shell Petroleum Development Company, has shut down its Trans Niger Pipeline at Gio in Ogoni due to a recent fire. This pipeline feeds into Nigeria's strategic Bonny Export Terminal.

The shutdown is expected to lower Shell’s Nigerian exports by 180,000 bpd. Shell Petroleum Development has shut down the pipeline as a precautionary measure in order to determine the cause and impact of the fire.

The Trans Niger Pipeline is one of two major pipelines that carry the Bonny Light crude grade for export to its Forcados terminal in the Niger Delta. The pipeline was first shut down in Jul 2016 following a leak at the same location in Ogoni land.

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Shell’s other major export terminals in Nigeria and Forcados were closed in February due to attacks by militants. These repeated militant attacks have caused the Nigerian oil production to decline from 2.1 million barrels a day to 1.7 million barrels.

Headquartered in The Hague, the Netherlands, Shell is one of the largest integrated oil and gas companies in the world. It explores for and extracts crude oil, natural gas and natural gas liquids. It has interests in chemicals as well as power generation and renewable energy.

Predictably, the commodity price slump has adversely affected Shell’s financials, particularly at its upstream unit. Furthermore, Shell’s revenues, earnings and cash flow have been significantly hurt by weak natural gas prices. Attacks on the company’s local establishments by the Nigerian militants have added to its woes.

Moreover, Shell’s peers – ExxonMobil Corporation (XOM - Free Report) , Chevron Corporation (CVX - Free Report) , Braskem S.A. (BAK - Free Report) – have also been reeling under issues like low oil prices and weak refinery margins.

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