Shell Is Unlikely to Restore Nigeria Output This Year (Update1)
By Fred Pals
Oct. 26 (Bloomberg) -- Royal Dutch Shell Plc., Europe's second- largest company by market value, said Nigerian oil production halted because of militant violence is unlikely to be restored this year.
Shell's share of production in Nigeria in the third quarter was 185,000 barrels a day lower than a year earlier because of deferred production, mainly in the country's Western Delta, the company said in its third-quarter earnings report today.
Attacks by militant groups in Nigeria this year led to the closure of wells and pumping stations, prompting Shell in July to lower its 2006 output forecast. The Hague-based Shell and other companies have halted about 500,000 barrels a day of output because of the violence.
``No firm date can be given for the re-start of the production, nor is it possible to predict the rate of ramp-up to full production,'' Shell said. ``Restricted access in the area continues to impact the drilling program for the further and the progress of new projects.''
Chief Executive Officer Jeroen van der Veer said one of the reasons for increasing unrest in Nigeria is elections in the country scheduled for April.
``We've been in Nigeria for decades and we've seen this happen before,'' he said on a conference call today, without providing a timetable for restoring production.
Production Target
Chief Financial Officer Peter Voser said Shell may be forced to lower its 2009 output target of 3.8 million to 4 million barrels a day if drilling continues to be affected in Nigeria. Delays at the Sakhalin-2 project in Russia may also affect the goal, he added.
``We lost a year of drilling in 2006,'' Voser said on the call. ``If that continues in 2007, we will have to look at production targets for 2009.''
Companywide oil and gas production in the third quarter rose 1 percent from a year earlier to 3.251 million barrels a day. Shell added new production of 257,000 barrels a day, including oil from the Bonga and Erha fields offshore Nigeria. Shell has a 55 percent share in Bonga and 44 percent in Erga.
New output also came from West Salym in Russia, Champion West Phase III in Brunei and E8 in Malaysia. Shell holds 50 percent stakes in each of the three projects.
To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net
Last Updated: October 26, 2006 08:55 EDT |
