Saturday, February 18, 2006

Following Offshore Attack, Shell Suspends $22 Million Per Day Of Oil Shipments; Oil And Gas Prices Will Rise Sharply

Royal Dutch Shell announced today is was suspending indefintely export of some 380,000 barrels of crude a day as it figures out how to deal with a bombing that damaged an offshore loading terminal, Reuters reported. At $60bbl, the shipments are worth $22.8 million per day.

The damage illustrates the abundant need to deal with Ijaw militants behind the bombing who demand better sharing oil-revenue-sharing arrangements for the peoples of the Niger Delta region, and to develop offshore fields immune from attack by the ethnic militias that prey upon onshore and close offshore oil facilities.

Some 14.4 billion barrrels are believed to be awaiting exploitation in the Nigeria-Sao Tome and Principe Joint Development Zone, where drilling has been delayed by politival disputes for several years.

The militants also kidnapped nine foreign workers and blew up two oil pipelines.

The militants are asking the release of a disgraced Governor of Bayelsa state and the leader of their movement, and may have been reacting to a Nigerian Army attack in Bayelsa State on Wednesday that sank eight or 10 of their barges loaded with stolen oil.

The suspension is certain to push global oil prices far higher.

Here is the story on the assault today:

Nigeria suspends 380,000 bpd oil exports after attack

Saturday February 18, 7:52 AM EST

LAGOS (Reuters) - Royal Dutch Shell suspended exports from the 380,000 barrel-a-day Forcados terminal on Saturday after militants bombed the tanker loading platform, a senior oil industry source said.

The company is still trying to ascertain the damage to the platform, which is located three miles offshore, but has already begun shutting oilfields in the area which feed the terminal, the source added.

"Of course, no ships can go near there now. This is going to be a major deferment," the senior industry source said.

"If we can't export, we can't produce," he added.

Nigeria is the world's eighth largest oil exporter and normally pumps about 2.4 million barrels per day.

The militant Movement for the Emancipation of the Niger Delta, which is fighting for more local control over the Niger Delta's oil wealth, claimed responsibility for Saturday's attacks, which also included the kidnapping of nine foreign workers and the bombing of two pipelines.

President Olusegun Obasanjo has called a meeting of oil industry and security chiefs to discuss the crisis later on Saturday, the source said.

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