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Wed, Mar 26, 2003 - Page 12 News List

Shell turns off Nigerian oil output

BLOOMBERG , LONDON

Royal Dutch/Shell Group and ChevronTexaco Corp shut down more than a third of Nigeria's oil production because of clashes between soldiers and Ijaw militants, adding to investor concern about world supplies.

Shell, Europe's largest oil company, ChevronTexaco, the second-largest US oil company, and Total Fina Elf SA of France have reduced output by 817,500 barrels a day, or 37 percent of Nigeria's production, last month. Nigeria is the fifth-biggest oil exporter to the US.

The violence, sparked by demands from the Ijaw minority for greater political representation, adds to pressure on oil supplies threatened by the US-led attack on Iraq, the Middle East's third-largest producer, and reduced shipments from Venezuela after a nationwide strike.

Crude oil in London rose as much as 6.2 percent, its biggest gain since April 2002.

"We would not count Nigerian production as being a secure supply source for a while to come," said Paul Horsnell, head of energy research at JP Morgan Chase & Co.

Crude oil rose, adding to its biggest gain in 15 months yesterday, as resistance to a US-led invasion of Iraq raised concern that its oil will be kept off the market longer than expected.

Crude oil for May delivery rose as much as US$0.39, or 1.4 percent, to US$29.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Oil traded at US$29 a barrel at 12:50pm Singapore time.

Shell has evacuated workers from the southern swamps of the western Niger River delta and shut down about 320,000 barrels a day in its western division, spokesman Simon Buerk said. An additional 50,000 barrels of production was stopped in the eastern division.

Crude conflicts

* Nigeria is the fifth-biggest oil exporter to the US.

* Shell, ChevronTexaco and Total Fina Elf SA of France have reduced output by 817,500 barrels a day, or 37 percent of Nigeria's production, last month.

* Crude oil rose, adding to its biggest gain in 15 months yesterday.


On Friday, Shell declared force majeure, a legal principle that allows it to miss contractual obligations because of circumstances beyond its control, on exports from its Bonny and Forcados terminals, partly because of the unrest.

Shell Petroleum Development Co, a joint venture with Nigeria's state-run oil company, normally produces about 800,000 barrels a day of low-sulfur crude, a type of oil that is easily converted into fuels such as gasoline. The government owns 55 percent of the venture, Shell 30 percent, Total 10 percent and Eni SpA 5 percent.

ChevronTexaco has shut down daily production of 440,000 barrels, the company said in a statement. Relocating workers from the Escravos terminal and related offshore platforms also stopped daily production of 87 million cubic meters of natural gas.

Two soldiers and three Nigerian workers were killed as Total evacuated staff from oil installations Friday and Saturday, said Paul Floren, a spokesman for Europe's third-largest oil company.

Total has reduced production by 7,500 barrels a day.

Total pumped the equivalent of 174,000 barrels of oil a day in Nigeria in 2001.

Exxon Mobil Corp, the world's largest publicly traded oil company, said its Nigerian oil and gas output hasn't been affected, spokeswoman Marcia Zelinsky. All of the Irving, Texas-based company's Nigerian production is offshore, she said.

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