Pipeline shut on Dec. 11; repair work could last several weeks.
Deliveries of crude oil through the Forties pipeline in the North Sea are under force majeure for the first time in decades and operator INEOS said on Thursday there was no timeline yet for repair work that could last several weeks.
The 169-km pipeline, which carries around a quarter of all North Sea crude output and around a third of Britain's total offshore gas production, has been closed since Monday, following the discovery of a small crack in part of the system onshore in Scotland.
Force majeure, which suspends a company's contractual obligations in the wake of situations that lie beyond its control, is common in oil-producing nations like Nigeria where unrest often disrupts output, but very rare in the North Sea.
Oil traders with long experience of dealing in North Sea crude said they hadn't seen a similar situation in years.
"I'm going to go with decades for any notable force majeure events," said a North Sea trading source. "We had one minor case where force majeure was declared, but on a tiny field which would have been totally under the radar."
The last major incident that led to a declaration of force majeure took place after the 1988 Piper Alpha disaster, in which 167 men died after a gas explosion
on an oil platform
Privately-owned INEOS, which runs the 200,000-barrel per day Grangemouth refinery in Scotland, said it continued to assess the situation.
"The pipeline has been in place since 1975 and has been operating since then," INEOS spokesman Richard Longden said.
"It is a unique instance. It just happens to have been on INEOS' watch, shortly after we acquired it."
INEOS bought the system from BP in late October for $250 million.
Forties crude is the biggest of the streams of oil supply that come from the North Sea, one of the world's oldest crude basins, and underpins the international dated Brent benchmark price.
The International Energy Agency (IEA), which advises Western governments on energy policy, said on Tuesday was monitoring the situation, but saw no need to release strategic stocks of crude as the market remained well supplied.
"For the time being, in response to the Forties pipeline incident, we have reduced our estimate for UK production in December by 300,000 bpd (barrels per day), and we will revisit this as the situation becomes clearer," the IEA said in its monthly oil market report on Thursday.
Forties was set to export 21 crude oil cargoes of 600,000 barrels each, amounting to 406,000 bpd, in December and 20 cargoes in January, according to loading schedules.
BP still coordinates the Forties cargo loading programme, despite no longer owning the pipeline. Cargoes that had been scheduled to load from this week will be delayed, trade sources said.
"It looks like a complete mess," said a senior trader with a major trading desk. "INEOS has declared force majeure on the pipeline but BP is still coordinating the loading programme and has not declared anything yet. So people are struggling to understand what's going on."
BP declined immediate comment.
Another trade source said the loading dates could become something of a moving target, a headache for those buying or selling the oil.
"All the cargoes will get shifted back later," this source said. "They will push all the dates back to where they think they might be and the revise them again as we go along."
By Alex Lawler and Amanda Cooper