Tuesday, February 2, 2010

Shell cuts output over attack in Niger Delta

SHELL announced on Monday that it has shut in some oil production in Niger Delta after a key supply pipeline was sabotaged.

"We have shut in some output as a result of the vandalisation of the Trans Ramos pipeline in our western operations at the weekend," Shell Spokesperson, Precious Okolobo, told AFP.

He said a leak was observed on Saturday, the leak was stopped and an investigation has confirmed the leak was due to a sabotage.

"Three flow stations were shut down to allow for the investigation. Repairs will commence as soon as possible."

Okolobo did not disclose the volume of production loss suffered.

The Movement for the Emancipation of the Niger Delta (MEND) issued a statement on Monday to say that it did not attack the pipeline, even though it had threatened at the weekend to call off its truce agreed with Abuja on October 25 last year.

The MEND clarified, nonetheless, that it fully supports the attack by those it called freelance freedom fighters.

Joint Task Force Spokesman, Timothy Antigha, said the situation is being studied.

The MEND has threatened to resume "all-out" violent attacks on oil facilities, claiming it has received no effective peace dividend from the amnesty deal.

It explained that it had ordered the ceasefire in the hope of securing talks with the government, "true dialogue founded on a sincere desire to bring justice to the people of the Niger Delta, and true peace to Nigeria."

But three months on, the MEND said, "It is sufficiently clear that the Nigerian Government has no intentions of considering" its demands.

Oil prices on Monday rose above $73 per barrel (pb), driven by news of attacks on an oil pipeline in Nigeria.

The attacks are a "noticeable setback" for Nigeria's oil industry, said JBC Energy in Vienna.

"If these attacks continue, the recent upswing in the country's crude production from 1.7 million barrels per day (bpd) last July to two million (bpd) in January might turn out to have only been a short period of relief for the country's plagued upstream industry," JBC Energy alerted.

Armed groups seeking a fairer share of oil revenue for Niger Deltans have since 2006 staged attacks on oil installations in the region, playing havoc with crude output and international oil prices.

At the peak of the attacks the violence slashed Nigeria's crude production by about one million bpd, which saw Angola overtake it as Africa's top oil producer.

Shell, one of the top oil operators in Nigeria, has seen much of its almost one million bpd output slashed because of the unrest.

Last weekend, it announced the transfer of its interest in three production licences and related equipment in the Niger Delta to a consortium of two Nigerian companies.

Shell Managing Director, Mutiu Sunmonu, said the sale supports Nigeria's goal of expanding opportunities for local energy companies.

"We have been in Nigeria for more than 50 years and remain committed to doing business here. This transaction should be seen in the context of Shell's active portfolio management of its assets and interests across the world," he explained.

"The agreement covers Shell's 30 per cent interest in oil mining leases 4, 38 and 41 covering approximately 2,650 square kilometres in the north western Niger Delta.

"The buyer is Seplat Petroleum Company Limited, a Nigerian company jointly held by two Nigerian firms, Platform Petroleum Limited and Shebah Petroleum Development Company Limited, along with Maurel & Prom of France.

"The agreement is subject to the approval of the Federal Government of Nigeria and the national oil company, the Nigerian National Petroleum Corporation (NNPC)."

Shell is the operator of the joint venture among the NNPC (55 per cent), Shell (30 per cent), Total E&P (10 per cent ), and Agip Oil (five per cent).

Sumonu said Total and Agip will also transfer their interests in the three oil mining leases.

"The area includes about 30 wells with a production capacity of approximately 50,000 barrels of oil equivalent per day. The wells also produce natural gas for domestic and industrial use.

"Crude production is currently shut down awaiting completion of repairs to an export pipeline damaged in late 2008."

Daily Independent

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