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MarketWatch: Security concerns continue to overshadow Shell's Nigeria oil operations

Security concerns continue to overshadow Shell's Nigeria oil operations
Last Update: 6:10 AM ET Apr 21, 2006

LAGOS (MarketWatch) — A spokesman for Shell Petroleum Development Co. in Nigeria said Friday that security concerns in the troubled oil-rich Delta region continued to hamper the restart of up to a fifth of the country's crude output.
“We are not in a hurry to start crude oil production,” said the official from SPDC, a Royal Dutch Shell PLC-led (RDSB.LN) joint venture with the state-run Nigerian National Petroleum Corp. (NNP.YY).
The SPDC spokesman added: “What we are looking for is security. We want to be assured that we can walk in there and clean up the place and remain there to produce,” he said.
A Shell spokeswoman in London reconfirmed Friday that 455,000 barrels a day of Nigerian production from its local joint-venture remained shutdown. Shell owns 30% in the venture, in which the Nigerian state oil company is a majority shareholder.
She added that the Forcados terminal and the offshore EA field remain under force majeure, a clause that allows suppliers of crude to halt deliveries to customers without a legal breach of contract.
In an e-mail late Thursday, the militant Movement for the Emancipation of the Niger Delta said: “For the errant oil companies that still choose to remain and operate in our lands and waters, we shall come like a thief in the night.”
Militants Wednesday changed tactics and carried out a car bomb attack at a military barracks in the oil center of Port Harcourt, killing at least one person. Previously, they have kidnapped foreign oil workers but released them unharmed.
Nigeria has also lost more than $1.5 billion in crude export revenues and the government recently moved in more troops to secure oil facilities in the Delta.
However, the Shell official said the presence of troops wasn't guarantee enough for the company to resume operations.
“Were the soldiers not there when the militants attacked the pipelines?” he asked.
“There is a difference between guarding a flow station and a pipeline, which runs across several kilometers,” he noted.
Facilities attacked by the militants include flow stations and a pipeline belonging to SPDC; a pipeline belonging to the Nigerian Agip Oil Co., a unit of Italy's Eni SpA (E), and a gas pipeline belonging to Chevron Corp. (CVX) unit ChevronTexaco Nigeria.
The group has also said it would target ExxonMobil Corp.'s (XOM) operations.
ExxonMobil said this week that crude output at its offshore Yoho facility is returning to normal following an “operational event” last weekend.
Its subsidiary, Mobil Producing Nigeria Unlimited, has developed the $1.3 billion Yoho project since 2002 and the shallow-water project currently produces about 150,000 b/d, with a peak production goal of 165,000 b/d, according to previous reports from the company.
MEND said Wednesday: “In the coming weeks, we will carry out similar attacks against relevant oil industry targets and individuals. “At a time of our choosing, we will resume our attacks with greater devastation and no compassion on those who choose to disregard our warnings,' they warned in an e-mail signed by Jomo Gbomo.
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