Surviving Critical Times Hard To Deal With

Monday, February 20, 2006

Shell Shock in Nigeria

Too Bad Royal Dutch Shell Did Not Take The Peaceful Hand Offered By Ken Saro Wiwa.
Will compromise ever be an option again?

Crude Oil May Rise After Attack Cuts Nigerian Exports
Feb. 19 (Bloomberg) -- Crude oil may rise in London tomorrow after an attack on a terminal operated by Royal Dutch Shell Plc cut Nigeria's export capacity by about 20 percent and Nigerian militants today vowed to carry out new attacks on oil companies. Shell closed the Forcados oil port in the Niger River delta yesterday, halting shipments from the 400,000 barrel a day terminal. Militants also took nine foreign workers hostage and attacked two pipelines. Oil surged in New York on Feb. 17 on concern that output in Africa's top producer may be cut. `Nigeria is becoming a chronic problem for the oil market,'' said Tony Nunan, assistant general manager of petroleum business at Mitsubishi Corp. in Tokyo. ``Brent crude oil is going to shoot up in London tomorrow.'' Brent crude oil for April delivery rose $1.10, or 1.9 percent, to $59.89 a barrel on Feb. 17 on London's ICE Futures exchange. Electronic trading in Brent crude oil starts at 9 a.m. Singapore time tomorrow. The New York Mercantile Exchange, the world's largest energy futures market, is closed tomorrow for a holiday. Crude oil for March delivery rose 2.4 percent to $59.88 a barrel in New York on Feb. 17, its largest gain this month, after the British Broadcasting Corp. reported that the Movement for the Emancipation of the Niger Delta planned to declare ``total war'' on foreign oil companies. Almost all oil production in Nigeria, which exports 2 million barrels a day, is in the delta. Workers Seized Oil prices have tripled since 2001 as global oil demand, led by the U.S. and China, has risen faster than supply. Nigerian militants today issued new threats against oil companies in the Niger River delta. Fresh targets will be hit shortly,'' Jomo Gbomo, a self- described spokesman for the militants said today in an e-mailed response to questions. ``There is no shortage of things to destroy.'' The militants seized the nine foreign oil workers, including three U.S. citizens, from a Shell-contracted boat yesterday morning. The hostages worked for oil services company Willbros Group Inc., the Panama City-based company said in statement. The market is very vulnerable to a supply shock like this,'' said David Thurtell, a commodities analyst at Commonwealth Bank of Australia in Sydney. ``This news will push up prices when trading starts tomorrow.'' No loading will take place at the Forcados terminal this weekend, Shell spokeswoman Caroline Wittgen said yesterday. Shell has evacuated workers from its offshore EA field, cutting production by 115,000 barrels a day, Wittgen said. The evacuation is a ``precautionary measure in light of recent events in the Niger Delta,'' she said. Nigeria, which is the fifth-biggest supplier to the U.S., produces low-sulfur, or sweet, crude oil, prized by refiners for the proportion of high-value gasoline it yields. Shell, based in The Hague and the world's third-biggest oil company, produces about half of Nigeria's output. The Niger Delta movement has targeted Shell installations after alleging the company allowed an airstrip it operates to be used for a Nigerian Air Force helicopter attack on villagers in the region. Shell said it could neither confirm nor deny the field had been used. The Nigerian government said the helicopters were used to disable barges engaged in oil smuggling. All pipelines, flow stations and crude loading platforms will be targeted for destruction,'' Jomo Gbomo, a self-described spokesman for the rebels said yesterday. ``This impromptu action is a direct consequence of the helicopter attacks on several communities in the region.''

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, a Shell-funded report on the area said in 2004. It cited studies showing per-capita income in the region to be below the national average of $260. Unemployment surpasses 90 percent in some areas. The militants say their aim is to win control of Nigeria's oil riches for the people of the Niger Delta. Nigeria produced 2.36 million barrels of oil a day last month, making it the sixth- biggest producer in the Organization of Petroleum Exporting Nations last month, according to Bloomberg data. Exxon Mobil Corp., the second-biggest oil producer in Nigeria, hasn't reduced operations in the country following today's attacks, spokeswoman Susan Reeves said in a telephone interview from Houston yesterday. Exxon Mobil's daily production in Nigeria is 650,000 barrels of oil per day, she said. Chevron Corp., the third-biggest producer in Nigeria, said the company has no plans to evacuate staff from the Niger delta. Shell's Nigerian subsidiary last month halted the flow of 106,000 barrels a day, or about 5 percent of the country's total output, through the Forcados terminal after a Jan. 11 attack by the militants on the Trans-Ramos pipeline. Last month, the militants kidnapped four oil workers from a Tidewater Inc. supply boat near the EA offshore field run by the Shell venture and held them for 19 days. They were released unharmed.


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