Shell Nigeria's Bonny Crude Output Cut After Attack
Bloomberg, 21 Apr 2008View original article
Royal Dutch Shell Plc said a militant attack on a pipeline has cut as much as 169,000 barrels a day of Nigeria's Bonny Light crude production as rebels claimed responsibility for two more strikes today.
The Movement for the Emancipation of the Niger Delta said it blew up a section of Shell's Greater Port Harcourt Swamp Line on April 17. MEND today said it has since attacked two more pipelines in Nigeria's Rivers State, possibly belonging to Shell and Chevron Corp.
The April 17 attack has halted about 169,000 barrels a day of crude production, Shell spokesman Rainer Winzenried said in an e- mailed statement today. That's about 9.5 percent of the crude oil scheduled to be exported from Nigeria this month, according to Bloomberg calculations based on loading programs.
Nigeria's oil industry has been targeted by militants over the past two years, cutting production of the country's light, sweet oil, valued by U.S. refiners because of its gasoline yield. MEND raids that started in February 2006 have cut more than 20 percent of exports from Nigeria, Africa's biggest producer.
Shell will declare a so-called force majeure on exports of Bonny crude exports in April and May from tomorrow as a result of the April 17 attack, Winzenried said. Force majeure is a legal clause that allows companies to miss contract deliveries because of circumstances beyond their control. Bonny exports were scheduled to average about 221,667 barrels a day in April. Total Nigerian exports were forecast at 1.78 million barrels a day.
New Record
Crude futures contracts in New York climbed to a new record after Shell said exports would be cut. Crude oil for May delivery rose to $117.60 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since futures started in 1983. Oil traded at $116.72 at 4 p.m. in London.
Today's attacks in Rivers State were on pipelines located in Isaka River and Abonnema River and took place at 1 a.m. and 3:10 a.m. local time, respectively, according to a statement today by the militants. In the statement, presented as an open letter open letter to President George W. Bush, the group said it would not be intimidated by the USS Swift warship, which is transiting the Gulf of Guinea.
The sabotage, billed as part of Operation Cyclone, "dispels the false impression that peace and security have been restored in order to gain the confidence of potential investors in the oil and gas sector," MEND spokesman Jomo Gbomo said in the statement.
Shell spokesman Precious Okolobo neither confirmed nor denied today's attack. Chevron spokeswoman Margaret Cooper said the company had "no information about an attack to Chevron pipelines in the region."
Injustice
MEND said today's attacks were aimed at protesting continued injustice in the Niger Delta and the detention of MEND leader Henry Okah, who is being tried for treason and next appears in court tomorrow.
Lieutenant Colonel Sagir Musa, spokesman for the Joint Task Force, denied MEND's claim. "We have our men stationed in the areas they claimed to have attacked, we have not received reports of any attack today," he said.
Levi Ajuonuma, a spokesman for the Nigerian National Petroleum Corp., which owns a majority stake in joint ventures with oil companies including Shell and Chevron, said he was unaware of today's attacks. He condemned MEND's increased violence in the Niger Delta.
"These people should realize that, at the end of the day, this will not solve anything," Ajuonuma said in an interview from Abuja. "They're just adding to the increase in the price of oil, this is not the way to go. They should return to dialogue."
'Not in Denial'
Gbomo said MEND was open to meeting with former U.S. President Jimmy Carter, saying Carter "is not in denial" about the role of freedom fighters, as witnessed by his recent meetings with the group Hamas.
MEND previously said it would intensify attacks to protest the arrest and closed trial of Okah.
Communities in the Niger Delta, a maze of creeks and rivers feeding into one of the world's biggest remaining areas of mangroves, are among Nigeria's poorest, according to a 2004 report funded by Shell. Unemployment is at more than 90 percent in some areas.
