Nigerian Oil Production Partially Shut Down By Attacks, Prices Rise
By Jad Mouawad
THE NEW YORK TIMES
Oil prices rose sharply Monday after a series of violent attacks by militants in the Niger Delta that shut down nearly a fifth of Nigeria’s oil production.
Brent crude oil for April delivery jumped $1.57 a barrel, to $61.46, on London’s ICE Futures exchange. Trading in the United States was closed because of Presidents Day.
Tensions in the oil-rich Niger Delta have flared since Saturday after armed militants kidnapped nine foreign oil workers, set pipelines on fire and disrupted a major export terminal in the latest series of clashes between local ethnic groups and the Nigerian central government.
As a result of these attacks, Nigeria’s oil production has been cut by 455,000 barrels a day out of a total of about 2.5 million barrels, according to Royal Dutch/Shell, the main foreign producer in Nigeria. A major oil field was shut down as a precautionary measure, Shell said.
The threat to oil supplies from Nigeria, Africa’s largest oil producer, comes at a time of heightened concerns about the security of global supplies given the overall tightness in production and the rising demand for oil.
Because there is little spare capacity in a global oil system that consumes some 84 million barrels of oil a day, small incidents can have broad effects.
“The incidents in Nigeria are happening at a time when geopolitical events seem to be following each other at a near-continuous rhythm — the worsening of Iraq’s oil industry, the tensions with Iran, or the continuous war of words with Venezuela’s Hugo Chavez,” said Frederic Lasserre, the head of commodity research at Societe Generale in Paris. “It’s a long list, and it fosters a climate of very volatile oil markets.”
Armed rebels with a group called the Movement for the Emancipation of the Niger Delta have threatened more violence in a campaign to free two imprisoned leaders, according to the Reuters news agency.
The rebels aimed to cut Nigeria’s oil production by 30 percent and warned all foreign workers to leave the delta immediately, Bloomberg News said.
Nigeria is the fifth-largest oil exporter to the United States, after Mexico, Venezuela, Canada and Saudi Arabia. Nearly half of Nigeria’s oil exports go to the United States.
According to Shell, the Forcados loading platform, which is about 12 miles offshore, was set on fire while a pipeline was blown up on Saturday.
The nine foreign contractors who were kidnapped Saturday — three Americans, two Egyptians, two Thais, one Briton and one Filipino national, working for Willbros Group of Houston — were working on a pipe-laying barge.
On Monday, another pipeline was damaged in a new explosion, said Caroline Wittgen, a spokeswoman for Shell in London. Shell has maintained a declaration of “force majeure” for the Forcados terminal, meaning it can no longer honor delivery of its supplies. Last month, the company had already been forced to cut its output sharply because of previous attacks. Analysts said the weekend events showed the armed groups were willing to step up pressure on the government by aiming at offshore oil facilities, which had largely been spared so far.