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Attacks Limit Shell’s Output Of Nigeria Oil

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Attacks Limit Shell’s Output Of Nigeria Oil

By SPENCER SWARTZ
July 30, 2008; Page B2

LONDON — Royal Dutch Shell PLC said it won’t be able to meet a significant chunk of its Nigerian oil-export obligations with customers for the next two months after militant attacks on its facilities early Monday.

Shell wouldn’t say exactly how much crude oil would be affected but the action will keep global oil markets short of a key source of Nigerian Bonny crude supply — prized by refiners for its low-sulfur quality that makes it relatively easy to refine — and probably keep oil prices supported.

Shell declared force majeure with customers after assessing the damage caused by attacks on the Nembe Creek and Rumuekpe oil pipelines, said Shell spokesman Rainer Winzenried. The force majeure, expected to last until September, legally protects Shell from not meeting contractual obligations because of factors outside its control.

Oil prices, which rose $1.47 Monday in part on the assaults, fell Tuesday. The light, sweet crude contract for September delivery on the New York Mercantile Exchange fell $2.54, or 2%, to settle at $122.19.

Nembe Creek typically operates at about 130,000 barrels a day of capacity and feeds the Bonny oil-export terminal.

Write to Spencer Swartz at [email protected]

http://online.wsj.com/article/SB121733081312993039.html

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