Nigerian violence strikes a blow to Shell

Royal Dutch Shell's Nigerian venture suffered a major setback with the abduction of four workers and damage to a pipeline resulting in a combined production cutback of some 226,000 bbl of oil.

Offshore staff

(Nigeria)- Royal Dutch Shell's Nigerian venture suffered a major setback with the abduction of four workers and damage to a pipeline resulting in a combined production cutback of some 226,000 bbl of oil.

The four workers were kidnapped on Wednesday afternoon from a support vessel, theLiberty Service, by a group of armed men riding in three boats. As a result, the EA shallow offshore field that was being serviced by Liberty Service was shut down, a production loss of 120,000 b/d to Shell. In line with emergency response procedures, all non-essential service personnel on the field's FPSO Sea Eagle were evacuated after the abduction.

A spokesman for Shell's Nigerian subsidiary SNEPCO stated that "No fatalities were reported during the incident although one of the abducted persons sustained injuries. No grievances or demands have so far been made to SNEPCO or the service companies." As of Thursday evening, the whereabouts of the workers, a Honduran, a Bulgarian, a Briton and an American, remained unknown. The spokesman said, "We are yet to find them, the authorities are working on the case."

There are many places for the kidnappers to hide in the Niger Delta, a region consisting of a maze of creeks and rivers feeding into one of the world's biggest areas of mangroves.

Exxon Mobil Corp. said output from its facilities in Nigeria were normal and denied reports that its Yoho platform had been boarded by militants.

Also on Wednesday, a pipeline operated by Shell in southern Nigeria was attacked by unidentified persons. "The pipeline in Bayelsa state was vandalized on Wednesday by unknown persons but it's not an explosion. Some 106,000 bbl of oil were affected," another Shell spokesman said. The company is currently making efforts to repair the line and get it back in operation as quickly as possible.

The lost production forced Shell to declare force majeure on the 106,000 bbl on Thursday, effective Friday. The Shell spokesman said, "The force majeure is likely to result in a three-to-four-day deferment of Forcados offtake scheduled for the rest of January and all of the February agreed program."

Shell continues to faces severe challenges to their operations in the country. The company lifted the suspension of crude oil export from Nigeria just last week following a pipeline explosion in December that cut production by 180,000 b/d.

While Nigeria is the biggest oil producer in Africa with a daily output of 2.5 MMbbl, communities in the Niger Delta have per-capita income below the national average of $260. Unemployment surpasses 90 percent in some areas.

Shell accounts for half of the country's oil production, but they are targeted by local villagers who frequently shut off wells, kidnap workers or commit other forms of violence to blackmail them and other companies operating there.

01/13/2006

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