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MarketWatch: Shell needs a month to bring back Nigeria oil output

Apr 3rd, 2006
by admin.

By Spencer Swartz,
Last Update: 5:38 AM ET Apr 3, 2006
ABUJA, Nigeria (MarketWatch) — Nigeria's Oil Minister Edmund Daukoru said Monday Royal Dutch Shell PLC (RDSA) has told him it will take around a month to bring back most of the country's shut-in oil production.
Daukoru, who is also the president of the Organization of Petroleum Exporting Countries, told Dow Jones Newswires in an interview: “We expect most of it back within a month. Shell told me last week that they needed about month before they can get most of their production back.”
He said around 27% of Nigeria's output had been knocked out by ethnic rebel attacks in the Niger Delta region. Attacks by the Movement for the Emancipation of the Niger Delta have cut the country's crude oil production by more than a quarter, or 641,000 barrels a day, out of some 2.4 million b/d of production.
Almost half of the country's daily output comes from Shell-run operations and it is the fifth-largest exporter of crude to the U.S. Nigeria's oil is high-quality light, low sulfur crude referred to as sweet, and is coveted by refiners in the U.S. and Europe because of its high gasoline content and relatively cheap processing costs. The attacks also have reduced Nigeria's electricity generation by a quarter.
Separately, Daukoru said he was increasingly concerned by rising world oil prices, that Monday were again pushing above $67 a barrel for U.S. light, sweet crude for May delivery.
“Prices are getting to the high side again. But it's not surprising because of all the concerns about the U.S. summer driving season and on concerns over the switch to ethanol,” he explained.
There are worries over new U.S. federal regulations and a planned nationwide phase-out of the additive methyl tertiary butyl ether used to make cleaner-burning gasoline.
The New York Mercantile Exchange's gasoline contract is based on the MTBE-blended gasoline and while the exchange has made use of MTBE optional in deliveries against its contract, analysts say commercial hedgers are increasingly shying away from the contract.
Daukoru said those in OPEC are “observing this and will be vigilant in moderating these types of price swings,” higher or lower, though he gave no details.
He reiterated Nigeria would lift its oil production capacity to 3 million b/d by the end of the year.
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