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THE WALL STREET JOURNAL: Thwarted Attack At Saudi Facility Stirs Energy Fears

Officials Worry Terrorists
Are Targeting Oil System;
Crude Futures Jump 4%
By BHUSHAN BAHREE and CHIP CUMMINS
February 25, 2006; Page A1

A foiled attack Friday on a Saudi oil-processing facility reinforced a dire concern for the U.S. and the energy industry: that terrorists are looking to score a direct hit on one of the world's largest petroleum chokepoints.
Friday's target, the vast Abqaiq facility, may be the single most vital cog in the world petroleum system. Saudi Arabia is the world's largest oil exporter. Abqaiq processes six million to seven million barrels a day of crude oil — equal to about two-thirds of daily Saudi output and 8% of the world's consumption.
“There is nothing that matches Abqaiq, in volume and strategic terms, in the world,” said Jim Burkhard, senior director of oil-market analysis at Cambridge Energy Research Associates in Cambridge, Mass.
Saudi officials said the thwarting of the attack proved that their oil assets are tightly guarded. Officials said two vehicles laden with explosives were attempting to drive through defenses at the facility's outer gates, roughly a mile from the main entrance, when security forces fired on them. The vehicles blew up, killing those inside and critically injuring two security guards. Al Qaeda has been implicated in previous oil attacks, but it wasn't clear if the group was behind this assault.
ABOUT ABQAIQ
• Oil was first discovered there in 1940.
• The oil field has 17 billion barrels of proven reserves.
• Aramco facility there processes about two-thirds of Saudi Arabia's oil output
• It is Aramco's main crude processing center.

Sources: Saudi government, EIA, Aramco
MORE ON OIL MARKETS
Issue Briefing: Unrest Behind Oil's RiseThough Saudi oil minister Ali Naimi said the attack and explosions at the site didn't affect oil and gas production or exports, markets were jolted by the news. Crude-oil futures jumped 4% on the New York Mercantile Exchange. Light sweet crude for April delivery surged as high as $63.25 a barrel before settling at $62.91, an increase of $2.37, on the New York Mercantile Exchange. (See related article on page B5.)
The attack comes as trouble in a slew of oil-producing powers has put energy security back atop the world agenda. Insurgents have hobbled oil output in both Iraq and Nigeria. Russia last month briefly cut off gas supplies to neighboring Ukraine. Iran has threatened to disrupt Persian Gulf shipments amid its dispute with the West over its nuclear ambitions.
Oil prices have doubled since 2003, as growing demand has outpaced supply increases, leaving the world with only a thin cushion of spare pumping capacity. The shortage has made it easier for governments, rebels and terrorists alike to use energy as a potent political weapon, sending prices soaring by withholding supplies, attacking pipelines or merely threatening to cause havoc.
More broadly, the attack brought to mind the nightmare scenario that has worried Washington for more than three decades: a significant disruption at Saudi export facilities on the Persian Gulf side of the kingdom. The threat from internal subversion has always been considered greatest in that area, and the ability of foreign military forces to help prevent trouble there is the lowest.
Such fears help explain President Bush's declaration in his State of the Union address this year that the U.S. needs to reduce its dependence on Middle Eastern oil imports. The fact that Mr. Bush referred specifically to the risks of reliance of Middle Eastern oil — as opposed to imported oil generally — offended the Saudis, who have long prided themselves on being a reliable supplier to the U.S. and the West. The Saudis may point to the fact that the attack was stopped as evidence they remain as reliable as ever, but the Bush administration could suggest it shows the need to follow up on the president's challenge.
Underscoring growing concern about oil terrorism, the North Atlantic Treaty Organization last week in Prague held its first energy-security conference, attended by senior U.S. and NATO officials.
In recent years, Saudi Arabia has ramped up spending on security following a spate of terrorist incidents. In 2004, there was a rash of oil-infrastructure strikes in Saudi Arabia that involved refineries and foreign oil workers, which while sensitive aren't strategically important enough to hobble the global energy supply.
According to the Energy Department, Saudi spending on security rose by 50% in 2004 to $5.5 billion. Abqaiq, for one, is so well-protected that “you would need an army, probably with air support, to get through,” said Nawaf Obaid, a Saudi oil and security consultant and an adviser to the government.
Still, the mere attempt highlighted the world's dependence on the facility, which may have been the purpose of the attack. “This is a weapon of mass media,” said Anthony H. Cordesman, an energy-security analyst at Washington's Center for Strategic and International Studies. “Even if they fail, they get the publicity.”
Security analysts said terrorists in Saudi Arabia appear to have switched to targeting oil facilities after a backlash in the kingdom. In previous attacks in populated areas, Saudis were angered by the terrorists killing innocent Muslims, Mr. Cordesman said. At the same time, Friday's attack also suggests terrorists have so far been unable to recruit people inside oil facilities who could help them penetrate the huge plants, he said.
Abqaiq receives petroleum streams that are pumped in from Saudi Arabia's giant fields, processes and cleans the oil by separating out water and gas, then pumps it through pipelines for export via shipping terminals on the nation's coasts.
Damage to Abqaiq could cripple Saudi exports, bottling in crude streams that can't be processed for export. That has happened once before: An accidental fire at Abqaiq in 1977 knocked out 70% of Saudi Arabia's output for three days. The Saudis gradually fixed the damage and output recovered over several weeks. Had the fire reached the complex's generating plants, it might have taken months, and possibly years, to rebuild Abqaiq.
Saudi Arabia has a few other vulnerable targets, including Ras Tanura on the Persian Gulf, the world's largest oil-export terminal, which can ship up to 6 million barrels a day. But the kingdom's network of pipelines and export terminals has a large cushion of fallback facilities. The Saudis have built spare facilities on the Red Sea coast, on the other side of the Arabian Peninsula. All told, they can move some 14 million barrels a day through their pipelines and ports, much higher than their current daily output of some 9.5 million barrels.
Almost all of the world's slim spare oil-pumping capacity of some 1.5 million barrels a day is in Saudi Arabia. So a dislocation of Saudi supplies couldn't be made up by another oil producer. To cover any shortfall, the world would have to resort to the use of strategic stocks of oil held by the 26 industrial country members of the International Energy Agency, as happened after last year's hurricanes in the Gulf of Mexico.
–Gerald F. Seib contributed to this article.
Write to Bhushan Bahree at [email protected] and Chip Cummins at [email protected] read more

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THE WALL STREET JOURNAL: Nigerian Militants Present One of Their Nine Hostages

Associated Press
WARRI, Nigeria — Armed militants holding nine foreign oil workers hostage in Nigeria showed one of them to reporters for the first time Friday, a 68-year-old American who said he and his colleagues were being treated well.
Three Americans, two Egyptians, two Thais, one Briton and one Filipino have been missing since they were kidnapped Feb. 18 by militants who stormed a barge belonging to a U.S. oil company in the Niger Delta's Forcados estuary. The kidnappers are demanding that people in the country's south receive a greater share of their region's oil wealth.
“We're being treated quite well. Just let's hope it ends well,” said the American, who identified himself as Macon Hawkins of Texas.
Nine militants wearing black masks, military fatigues and carrying Kalashnikov assault rifles and rocket-propelled grenade launchers brought the hostage to a group of journalists by boat in the Niger Delta. The militants reiterated demands for a third party to mediate an end to the crisis before returning the hostage to a boat, firing their weapons into the air and setting off into one of the delta's creeks.
Thursday and Friday, militants issued photos of what they said were the nine kidnapped foreigners. In an email, they also threatened more attacks on oil workers and the country's volatile oil industry. The militants released a separate statement saying the photos, which appeared slightly out of focus, were “pictures of our hostages with a section of the unit that secured their capture.”
“Oil industry workers should accept that we are going nowhere very soon and will show little mercy especially in facilities previously attacked,” the militants said. “We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning.”
The barge the hostages were abducted from was owned by Houston-based oil services company Willbros Group Inc., which was laying pipeline for oil major Royal Dutch Shell PLC.
The militants denied reports that any negotiations were taking place to secure the hostages' release.
Hostage takings have been a common occurrence in the volatile delta for years. Most of those kidnapped are released unharmed. Last month, militants held four foreigners for 19 days before releasing them unscathed.
The militants are demanding a greater share of oil wealth for their impoverished region, which has remained poor despite the large amounts of oil flowing from it. The militants say they also want to secure the release from jail of the delta's two most prominent leaders, Mujahid Dokubo-Asari and former Gov. Diepreye Alamieyeseigha.
Mr. Dokubo-Asari, who waged a struggle for autonomy for eight million Ijaws that dominate the Niger Delta for years, was jailed on treason charges in September. Mr. Alamieyeseigha was arrested recently in Nigeria after fleeing the U.K. on money laundering charges.
The militants said in the emailed statement that the hostages” release was “directly related to the release of Alamieyeseigha and Asari.” The statement added: “Politicians who don't care about how many soldiers and oil industry workers are killed as long as the oil keeps flowing.”
Separately, a Nigerian court on Friday ordered a Royal Dutch Shell joint venture to pay southern communities $1.5 billion in compensation for environmental pollution and degradation in the oil-rich Niger Delta. The payment was first ordered by the country's parliament in August 2004. The joint venture includes the Nigerian government, France's Total SA and Italy's ENI SpA.
Stuart Bruseth, Shell spokesman in London, confirmed the ruling and said he believed the company has “strong grounds to appeal.” Shell had gone to court to challenge the lawmakers' decision made in response to a petition by ethnic Ijaws.
The joint venture Shell operates produces a little under half of Nigeria's 2.5 million barrels daily of oil exports. read more

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THE WALL STREET JOURNAL: Framing the Issue: Unrest Behind Oil's Rise

A thwarted attack on a massive oil facility in Saudi Arabia rattled oil markets Friday, pushing up crude-oil futures by more than $2 a barrel.
THE BACK STORY: Heavy demand has kept the price of oil at about $60 since the end of July 2005. But lately, political concerns have been the primary driver of energy prices. In Saudi Arabia, the No.1 oil producer accounting for more than 30% of OPEC's production in 2005, suicide bombers Friday attacked the world's largest oil refinery, the Abqaiq oil complex. Although security forces stopped the assualt, analysts worry about more attempts on oil installations. Nigeria, which produced about 8% of OPEC's output last year, has been dealing for several months with militant attacks. Earlier this month, gunman took nine foreign workers hostage there, forcing oil giant Shell to shut in 450,000 barrels of daily production amid the unrest. Traders are also concerned over Iran, which is currently in a standoff with the West over its nuclear-energy program. In 2005, Iran ranked second in OPEC crude production.
WHAT'S NEXT: Oppenheimer analyst Fadel Gheit warned that any attack that shuts down a major Saudi facility could send the price of oil skyrocketing to more than $100 a barrel. Meanwhile, supply concerns are likely to remain subdued for the next couple of months due to the greater-than-usual stockpiles of key energy products, including crude and heating oil, as the unusually warm winter comes to a close. — David A. Gaffen read more

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THE NEW YORK TIMES: Oil Climbs 4 Percent on Saudi Attack

By REUTERS
LONDON (Reuters) – Oil jumped more than $2 on Friday after news of a suicide bomb attack at the huge Abqaiq oil facility in Saudi Arabia, which triggered worries about supply from the world's top crude producer.
At least two cars exploded at the gates of the Abqaiq site when security forces fired on suicide bombers trying to storm the facility in the country's eastern province.
“It's all about perception. Just the idea of an attack in Saudi Arabia is enough to make the market jumpy,'' said Glenn Murray, an oil broker at GM Oil.
Saudi Oil Minister Ali al-Naimi described the raid as a ''terrorist attempt'' but said oil exports had been unaffected. He said a limited fire at the site was being brought under control.
“This incident had no impact on oil and gas production in the kingdom,'' Naimi said in a statement carried by the official Saudi Press Agency. “The plant continued production at full levels and export operations are as usual.''
Most Saudi oil is exported from the Gulf via Abqaiq which handles about two thirds of the country's output.
“This just emphasizes fears over global oil supply security when we're already facing major ongoing risks in Nigeria, Iran and Iraq,'' said Gary Ross, CEO at PIRA Energy consultancy in New York.
U.S crude prices hit a high of $63.00 a barrel, up $2.46. They later eased back to $62.88 at 1920 GMT.
London Brent was up $2.04 at $62.58 a barrel.
U.S. blue chip stocks edged lower after the surge in oil price which revived worries about high energy costs and inflation.
TUGGED BY TWO FORCES
Oil prices had risen a dollar earlier Friday as fears of deeper disruptions to Nigerian exports overshadowed the comfort drawn from brimming fuel stockpiles in the United States.
Attacks on Nigeria's oil network have already forced Shell to cut output by 455,000 barrels a day, shutting in a fifth of the country's exports. Militants holding foreign oil workers hostage say they will continue attacks in the next few days.
But oil's upside may be limited by brimming U.S. fuel tanks. Gasoline stocks rose to 225.6 million barrels, the highest level in seven years, according to weekly data. Crude stocks rose 1.1 million barrels to 326.7 million barrels.
“The market is being tugged by two forces — data are pulling it down and political forces are pulling it up,'' said independent oil consultant Geoff Pyne.
Aside from tension in Nigeria, traders said Iran's nuclear ambitions and the possible ramifications for the nation's oil production also remained a worry.
The board of the International Atomic Energy Agencymeets on March 6 to discuss the next step in resolving Iran's nuclear row with the West.
Iraq, which has been struggling to get oil output back to pre-war levels, is suffering the worst sectarian violence since the fall of Saddam Hussein, compounding the geopolitical risks in the Middle East. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

THE NEW YORK TIMES: Armed Group Shuts Down Part of Nigeria's Oil Output

By LYDIA POLGREEN
Published: February 25, 2006
IN THE NIGER DELTA, Nigeria — They have, by all appearances, just a handful of boats, some machine guns and grenade launchers and, perhaps equally important, an e-mail address.
Macon Hawkins of Kosciusko, Tex., an employee of a pipe-laying company, is a hostage of the Movement for the Emancipation of the Niger Delta.
But with just those tools the Movement for the Emancipation of the Niger Delta has managed to shut down nearly a fifth of this nation's vast oil production, briefly push global crude oil prices up more than $1.50 a barrel and throw Nigeria's government into crisis over the group's demand that the oil-rich but squalid region be given a greater share of the wealth it creates.
“They have marginalized us for many years now!” shouted a machine-gun-wielding member of the militant group, his face covered in black cloth. “We are taking the bull by the horns now. Niger Delta is ready.”
For the last two months the shadowy militant group has mounted attacks on oil facilities here and taken more than a dozen foreign oil workers hostage, including some Americans, wreaking havoc on the industry that is the mainstay of Nigeria's economy. All of the hostages taken last month were released after 19 days, but new ones were seized last week.
In e-mail messages sent to the news media, the group says it seeks to liberate the Ijaw people, who make up the bulk of the population here and, the group says, have provided the lifeblood of the Nigerian economy, but with little reward.
The government says the group is made up of oil thieves and criminal gangs seeking to control the lucrative trade in oil stolen from pipelines in the labyrinth of creeks that make up the Niger Delta.
“It is pure criminality,” said Information Minister Frank Nweke Jr. “These are thugs who are using the plight of the poor to cover their illegal activities.”
Groups of militant youths in this restive region have long used hostage taking and sabotage to extort money from oil companies and prevent the authorities from stopping oil theft from pipelines, a process known as bunkering.
But the ferocity and frequency of the recent attacks, in which more than a dozen soldiers have been killed, have increased concern. The violence comes as oil prices have spiked and the political climate in Nigeria has deteriorated ahead of its next presidential election, to be held early next year.
Although the attacks have been directed primarily at Royal Dutch Shell, the oldest and largest oil producer in Nigeria, their real target is the government, said Sebastian Spio-Garbrah, an analyst at the Eurasia group, a private research firm.
“They are trying to hurt the government, not really the oil companies,” Mr. Spio-Garbrah said. “If the central government, which receives all these monies, is starved of money, the government will be weakened and they will be stronger.”
On Friday, boatloads of members of the group met with journalists on a creek in the delta to outline their demands and show their strength. They reiterated their insistence that foreign oil companies leave the region and the Nigerian military withdraw. They are also demanding the release of the leader of a militant group and the nation's only Ijaw governor, both of whom are in jail.
“We want the Nigerian military men to evacuate from this terrain,” one of the militants declared, brandishing his M-60 machine gun. “If we get them anywhere we are going to kill them one by one.”
Dressed in military fatigues and white T-shirts, dozens of men armed with Kalashnikov machine guns and grenade launchers sat aboard speedboats decked with the white flags of Egbesu, the Ijaw god of warfare. They showed one of the nine hostages they seized last week from a barge operated by an oil company contractor, and said they were prepared to seize more hostages and blow up more oil facilities if their demands were not met.
“These people are serious, very serious, about what they are doing,” said the hostage, Macon Hawkins, 68, an American from Kosciusko, Tex., who works for a company hired by Royal Dutch Shell to lay pipe in the region.
“They are going to fight,” Mr. Hawkins said, “and they are going to fight till death. So the army is not going to do a whole lot of good here. The best thing the army can do is pull out and get some negotiators in here and try to settle this thing before it really gets bad.”
Efforts to defeat the group militarily have not gone well, and it has managed to carry out several audacious attacks on oil facilities. The government says the group pays for its weapons by stealing oil, but several government officials, including two admirals of the Nigerian Navy, have been charged with stealing oil as well.

Nigeria is the world's eighth largest exporter of oil and an important supplier to the United States. Despite generating hundreds of billions of dollars in revenue since oil was discovered here in the 1950's, the Niger Delta is one of the poorest and least developed parts of the country.
read more

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THE NEW YORK TIMES: Iran Promises Answers on Atomic Work: Diplomats

By REUTERS
Published: February 25, 2006
BERLIN/TEHRAN (Reuters) – U.N. nuclear experts arrived in Iran on Saturday after Tehran promised answers to outstanding questions about work the U.N. fears could be linked to atomic ''weaponisation,'' Western diplomats said.
Separately, two diplomats said Tehran had begun operating 10 uranium enrichment centrifuges at its Natanz plant in central Iran, meaning the Islamic Republic has made good on its threats to resume the small-scale production of uranium fuel.
On Thursday, a senior diplomat in Vienna told Reuters the Iranians had promised the deputy director general of the Vienna-based International Atomic Energy Agency (IAEA), Olli Heinonen, information about a shadowy uranium-processing project that Western intelligence has linked to possible atom bomb work.
In addition to this uranium project — called the “Green Salt Project'' — an EU diplomat in Vienna briefed on the IAEA's probe of Iran's nuclear program said Tehran had also promised information related to possible work on nuclear ''weaponisation.''
“This trip is related to the entire issue of weaponisation, one of the major unresolved issues,'' said a European Union diplomat who follows Iran. “The Iranians have promised answers but it's unclear whether the answers will be sufficient to clear up all the IAEA's questions about Iranian weaponisation work.''
The term weaponisation includes making, testing and fitting a nuclear warhead to a delivery system, such as a missile.
Two Vienna diplomats said they doubted the Iranians were ready to finally come clean after decades of covering up work that the United States, European Union and their allies believe has been part of a covert plan to develop atomic weapons.
Iran denies wanting nuclear weapons and says it is only interested in the peaceful generation of electricity.
DELAY OF SECURITY COUNCIL ACTION
One EU diplomat said the Iranians were afraid the IAEA report would include complaints that Tehran continues to stonewall U.N. inspectors in their attempt to verify whether or not Iran's nuclear program is peaceful.
“They are afraid (IAEA chief Mohamed) ElBaradei's report for the March 6 board meeting will not have very good things to say regarding their refusal to answer questions about weaponisation,'' the diplomat said. “They want to soften it.''
He predicted Iran would give the IAEA enough information to require lengthy examination. This could delay any action by the U.N. Security Council, which will receive a copy of ElBaradei's report once it is discussed by the IAEA board next week.
Corey Hinderstein of the Institute for Science and International Security (ISIS), a U.S. think-tank, said the IAEA's unanswered weaponisation questions included Iran's high explosives tests, its design information related to the core of a nuclear weapon and the military's role in its nuclear work.
There were also questions related to U.S. intelligence recovered from a stolen laptop computer that suggests Iranian missile experts have been trying to develop a missile re-entry vehicle capable of carrying a relatively small nuclear warhead.
The EU diplomat said Iran's decision to press ahead with the enrichment of uranium, a process of purifying it for use as fuel in nuclear power plants or weapons, was especially disturbing given the open questions about possible weaponisation.
He said Iran's decision to feed uranium gas into 10 centrifuges was not in itself “a big deal.'' A thousand centrifuges of the type Iran has at Natanz would need several years to produce enough highly-enriched fuel for a single bomb.
“Weaponisation combined with enrichment is a big deal,'' he said.
The 10 centrifuges had been sealed by the IAEA until Iran decided to resume enrichment earlier this year, prompting France, Britain and Germany to end 2-1/2 years of talks aimed at resolving the stand-off with Iran.
But while Western nations threatened to press ahead with sanctions, Iran is to grant gas contracts to European firms Total, Shell and Repsol, an Iranian state oil firm said.
Iran is the West will balk at setting sanctions on OPEC's number two exporter while oil prices remain high. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

The Independent: IN BRIEF: Sakhalin project wins approval

The Independent – United Kingdom; Feb 25, 2006
Shell's $20bn(pounds 11bn) Sakhalin project off Russia's eastern coast was boosted when it emerged that an environmental impact report for the European Bank for Reconstruction and Development was broadly favourable.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Daily Telegraph: Grounds to appeal Nigerian Fine

Database
Legal
• London's plan to provide wireless networking throughout the City may expose companies to security breaches and legal action, lawyers believe.
• Former Morgan Crucible chief Ian Norris lost his legal challenge to Britain's extradition arrangements with the US.
• Royal Dutch Shell said it believes it has “strong grounds” to appeal a reported $1.5bn fine a Nigerian court has ordered it to pay the country's Ijaw people for environmental damage.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Reuters: Shell Canada suspends production at oil sands mine

CALGARY, Alberta (Reuters) – Shell Canada Ltd. (SHC.TO: Quote) has halted production at its Muskeg River oil sands mine to repair a conveyor belt that was damaged on Friday, the company said.
The Calgary-based firm said bitumen production at the mine, which supplies feedstock to the Scotford upgrading refinery near Edmonton, Alberta, won't be restarted until it assesses the problem and a course of action can be determined.
The mine produced 178,000 barrels of bitumen a day during the fourth quarter, much of which was shipped to Scotford where it was converted to synthetic crude.
Janet Annesley, a spokeswoman for the majority-owned unit of Royal Dutch Shell Plc (RDSa.L: Quote), said the company has also reduced production at Scotford to the minimum needed to maintain critical systems, but would not specify current output.
“Production at the mine is being reduced and production at the upgrader has been reduced to a minimum,” she said. “We're hopeful that we'll be able to maintain some production.”
Annesley said workers at the mine site 75 km (45 miles) north of Fort McMurray, Alberta, noticed a tear in the conveyor belt, which Shell Canada says is the world's largest, on Friday morning. The company is trying to find out if the belt can be repaired or if it needs to be replaced by another that is on hand.
Annesley couldn't say how long the mine would be shut down for the repair. However Western Oil Sands Inc. (WTO.TO: Quote), which owns a 20 percent stake in the project, said in a release that replacing the belt would take four weeks.
Shell Canada said it will issue an update on the planned repairs early next week.
Chevron Corp. (CVX.N: Quote) is the third partner in the project with a 20 percent interest. read more

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The Guardian: Shell told to pay Nigerians $1.5bn pollution damages

· Oil giant will appeal against court decision
· Kidnap and sabotage cripple production

Rory Carroll, Africa correspondent
Saturday February 25, 2006
A Nigerian court yesterday ordered Royal Dutch Shell to pay $1.5bn (£858m) in damages for polluting the Niger delta, a fresh blow to the company which was already reeling from a kidnap crisis and a wave of sabotage against its installations.
A federal high court in Port Harcourt, the heart of the country's oil industry, ruled that Shell must compensate communities in Bayelsa state for degrading their creeks and spoiling crops and fishing. The decision was a major victory for the Ijaw people – who have campaigned for compensation for more than a decade – and one of Shell's worst legal setbacks.
The ruling came on the same day that news emerged of the nine employees of a US subcontractor kidnapped on February 18. The kidnappers of the nine – a Briton, three Americans, two Egyptians, two Thais and a Filipino – are demanding that people in the country's south receive a greater share of the region's oil wealth. The kidnappers have released what they call “pictures of our hostages with a section of the unit that secured their capture”.
Yesterday they also brought one of the Americans along the Niger delta by boat to speak to journalists. Identifying himself as Macon Hawkins, from Texas, he said: “We're being treated quite well. Just let's hope it ends well.”
Communities have repeatedly accused Shell of letting its oil spill into the rivers of the Niger delta, degrading the environment, spoiling crops and poisoning fish. Shell says most spills are caused by saboteurs trying to steal the oil for sale by international criminal syndicates on the world market.
As well as the court ruling and the kidnapping, this week has also seen militants blowing up pipelines and storming a loading platform, crippling Shell's output.
Justice Okechukwu Okeke's ruling in Port Harcourt yesterday upheld a vote by Nigeria's senate in August 2004 to fine Shell $1.5bn. Shell had argued that the parliamentary committee that made the original order in 2000 did not have the power to require payment. But the judge ruled that since both sides agreed to go before parliament, the order was binding.
Shell in London said the company would not comment in detail until it had received the text of the judgment; “however, we believe that we will have strong grounds to appeal as independent expert advice demonstrates that there is no evidence to support the claims”.
It added that it remained committed to dialogue with the Ijaw people – a claim rejected by Ijaw leaders. Chief Malla Sasime, the ruler of the Ijaw Epie kingdom in Bayelsa, said: “Our people have gone through due process to get the judgment.”
“They must pay the money or be ready to leave our land.” Another Ijaw leader, Ngo Nac-Eteli, said Shell would be prevented from operating on Ijaw territory if it tried to buy time by appealing against the judgment.
Militant groups in the Niger delta have fought the government and the oil industry for 15 years, demanding a greater share of oil revenues and compensation for environmental damage. In 1995 the writer and campaigner Ken Saro-Wiwa was executed after leading a peaceful uprising of the Ogoni in opposition to Shell. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.
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