Sabotage forces Shell to cut output in Nigeria

July 28, 2008

, LAGOS, July 28 – Anglo-Dutch oil giant Shell cut output in southern Nigeria Monday after militants sabotaged at least one of its pipelines supplying crude, officials said.

Shell declined to say by how much production was being reduced, stressing that the amount should not be exaggerated because of the possible effect on oil prices.

Oil prices had already risen on news of the attack, with Brent North Sea crude for September delivery climbing 1.58 dollars to 126.10 dollars a barrel, while New York\’s main contract, light sweet crude for September, rose by 1.50 dollars to 124.76 dollars a barrel.

"We have reduced production to avoid further environmental devastation," spokesman Rainer Winzenried told AFP from Shell\’s headquarters in The Hague.

The duration of the reduction would depend on when Shell could gain access to the damaged pipeline to make repairs.

Rebels of the Movement for the Emancipation of the Niger Delta (MEND) earlier claimed "heavily armed" MEND fighters had attacked two pipelines in Nigeria\’s main oil producing region in the southern Rivers state.

A Shell spokesman in Lagos said a helicopter overflight had confirmed damage to the Kula pipeline, but he was unable to confirm rebel claims of an attack on a second pipeline.
The attack was the latest to rock Shell, a major oil operator in Nigeria. The Anglo-Dutch oil group only recently resumed full deliveries from its offshore Bonga oilfield in Nigeria, shut down in June following an attack by MEND.

Bonga lies 120 kilometres (75 miles) offshore and has a daily output capacity of 200,000 barrels of oil and 150 million standard cubic feet of gas.

"In keeping with our pledge to resume pipeline attacks within the next 30 days, detonation engineers backed by heavily armed fighters from MEND today, Monday, July 28, 2008 at about 0115 hours sabotaged two major pipelines in Rivers state of Nigeria," the MEND said in an email.

"The first pipeline is located in Kula which has been previously sabotaged by us and the second in Rumuekpe, both belonging, we believe, to the Shell Petroleum Development Company."
Shell started production at Bonga in November 2005. By May 2007, 100 million barrels of oil had already been exported from there.

Shell has also resumed production of its Bonny Light crude in southern Nigeria, restoring around 130,000 barrels per day after an attack on its trunk line at Awoba in Rivers state.
The latest attack came barely a week after the MEND vowed new attacks within 30 days to "prove" that it had not collected money from the Nigerian government.

The head of the Nigerian National Petroleum Corporation, Abubakar Yar\’Adua, told a parliamentary hearing on July 22 that the firm paid 12 million dollars (7.56 million euros) in protection fees to Niger Delta militants to enable the repair of a damaged key crude supply pipeline.

"To prove that we are not a part of this deal, the Chanomi creek pipeline and other major pipelines will be destroyed within the next 30 days," the MEND said in its email to AFP.
Violent attacks and kidnappings targeting oil companies are a frequent occurrence throughout the Niger Delta.

Some are carried out by militants claiming to be fighting for a larger share of the region\’s oil wealth for local people, others by criminal gangs out to make ransom money.
Several foreign firms, including French tyre company Michelin and oil servicing firm Wilbros, have left the Niger Delta because of security problems.

The unrest has reduced Nigeria\’s oil output by a quarter, causing it to lose its position as Africa\’s biggest oil producer to Angola, according to figures from the Organisation of Petroleum Exporting Countries (OPEC).

Latest Articles

Live prices

Stock Market

Most Viewed