Lagos — Faced with a strike by its senior employees and community disturbances in its operational areas, the Shell Petroleum Development Company of Nigeria was forced late on Monday to declare force majeure starting at 00:01 hours, July 3, 2001.
A company invokes force majeure for protection under the law when unforeseen circumstances - or events beyond its control - make it impossible to meet previously agreed contractual obligations. By declaring it, Shell has effectively admitted it will be temporarily unable to meet its obligations to supply crude oil.
An official of the company said the force majeure would last up to August 9, 2001 but that the declaration would not affect the loading of crude by tankers; scheduled deliveries would be disrupted, however.
The overall volume of crude exported by Nigeria during this period is thus expected to be significantly down. One way this can be offset is for the state-run Nigerian National Petroleum Corporation to ask other companies to produce more than they have been doing. This, however, would depend on how much excess capacity the companies have available.
The official blamed strike action by Shell staff who are members of Pengassan, the Petroleum and Natural Gas Senior Staff Association of Nigeria; but he also cited communal disturbances which had led to the shutting down of some of Shell's flowstations.
The flowstations record the volume of crude oil lifed from the wells and supply the crude to the loading terminals from where it can exported.
On the strike, the Shell spokesperson said a meeting between the Association and company representatives began last Friday, but had yielded no results by late on Monday.
Shell, the first company to commence crude production in Nigeria, is the largest producer in the country, with its output being responsible for nearly 50 percent of Nigeria's total output. However, disagreements between Shell and its host communities have often led to disruption in its operations, as in the present case. The official did not give details of the communal disturbances.
