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Attack on Nigerian Pipeline Stalls Shell Deliveries

THE WALL STREET JOURNAL

MARCH 9, 2009, 9:44 P.M. ET

LONDON — Royal Dutch Shell PLC said Monday that a recent militant attack on a Nigerian oil pipeline had forced it to halt deliveries to many customers.

Shell has seen a spate of other attacks on its facilities in recent weeks and has been forced to end oil and natural-gas deliveries to many other customers until further notice.

The declaration, which protects Shell from lawsuits for not meeting oil deliveries to customers due to actions outside the company’s control, is expected to be in place for March and April, a Shell spokesman said.

He wouldn’t specify how much production and how many customers were affected, but a Nigerian oil official said the attack disrupted about 50,000 to 100,000 barrels a day of production for more than a week. The attack took place on the Escravos pipeline, which sends crude from Shell’s Forcados fields to the Escravos export terminal in the country’s main oil-producing region.

The assault follows the end of a cease-fire announced last month by Nigeria’s main militant group, the Movement for the Emancipation of the Niger Delta, and the group’s vow to attack more oil installations.

Nigeria’s main oil-producing region, the Niger Delta, is also a hotbed for oil theft by locals who tap into pipelines — causing an environmental mess for villages — and sell the crude on the thriving black market.

Around one quarter of Nigeria’s effective pumping capacity, or around 600,000 barrels a day, is currently shut because of militant attacks. Much of that production is operated by the Shell-run government joint venture.

The recent attacks have also hit the operations of U.S.-based Chevron Corp. and Italy’s EniSpA.

Write to Spencer Swartz at [email protected]

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