Shell Closes EA Field After Militants Attack, Take Hostages
Feb. 18 (Bloomberg) -- Royal Dutch Shell's venture in Nigeria shut down its EA offshore field, cutting 115,000 barrels a day in production, after militants took nine foreign hostages and attacked two pipelines and Shell's Forcados offshore oil export terminal.
Shell made the decision to close the EA field as ``a precautionary measure in light of recent events in the Niger Delta region,'' the company said in a statement from Lagos. The EA field accounts for about a 10th of Shell's production in Nigeria.
Willbros Group Inc. said the hostages were taken from a boat that was contracted by Shell, which pumps about half of Nigeria's oil output. The attacks sparked a fire at the Forcados terminal, which has a capacity of 400,000 barrels a day, and an explosion at the Chanomi pipeline, Shell spokesman Don Boham said.
``It could be that it shuts down all of Shell's onshore operations in Nigeria,'' Simon Wardell, an analyst in London at Global Insight, said in an interview today. ``The markets are going to discount Nigerian production in the price of oil.''
Shell's venture last month halted the flow of 106,000 barrels a day, or about 5 percent of the country's total output, through the Forcados terminal after a Jan. 11 attack by the militants on the Trans-Ramos pipeline. The militants have vowed to launch attacks to cut the export capacity of Nigeria, Africa's top oil producer, by 30 percent in February.
``Insurgents of all kinds are attacking the oil industry as a way of fighting the governments in charge,'' said Youssef Ibrahim, managing director of Dubai, United Arab Emirates-based Strategic Energy Investment Group. ``It's contributing to a lot of anxiety about the safety of supply.''
Targeting Shell
The militants said they targeted Shell today because Nigerian military helicopters had used an airstrip operated by the company to attack villagers in the Niger River delta.
``There is great anger this time owing to the loss of lives in communities attacked by the choppers,'' Jomo Gbomo, a self- described spokesman for the militants, said in a response to e- mailed questions. ``We have very little regard for the lives of these hostages as we have lost a number of civilians in these raids.''
Crude oil prices surged yesterday after the British Broadcasting Corp. said the militants declared ``total war'' on oil companies. Crude oil for March delivery rose $1.42, or 2.4 percent, to close at $59.88 a barrel on the New York Mercantile Exchange. Gasoline jumped more than 6 percent, the biggest gain in five months.
Nigeria produces low-sulfur, or sweet, oil that's easy to process into high-value fuels such as gasoline and diesel. The U.S. received an average 1.1 million barrels of crude oil a day from the West African country last year, making it the fifth-biggest source of imports, according to the Energy Department.
Forcados Fire
The fire on the Forcados export terminal was put out and ``we are investigating the cause and the damage,'' Caroline Wittgen, a Shell spokeswoman in London, said.
Reuters, citing an unidentified oil industry official, said Shell had suspended loadings at the export terminal after the militants bombed the tanker loading platform.
Among those kidnapped are three U.S. citizens, one from the U.K., two from Egypt, two from Thailand, and one from the Philippines, the militants said in an e-mailed statement. The U.K. Foreign Office in London confirmed the name given by the militants' statement of the British citizen as John Hudspith.
The hostages are all Willbros personnel, a company spokesman in Houston, Michael Collier, said in a telephone interview. Willbros has put together a crisis management team is trying to contact their families.
Kidnappers
The kidnappers didn't take the vessel and left some personnel on board, Collier said.
``That the Nigerian military has been preparing for weeks only for their incompetence to be revealed in mere minutes is enough warning to oil companies and their workers that they stand no chance against any of our units in the event of an attack,'' the militants' spokesman Gbomo said.
Exxon Mobil Corp., the second-biggest oil producer in Nigeria, hasn't reduced operations in Nigeria following today's attacks, spokeswoman Susan Reeves said in a telephone interview from Houston. Exxon Mobil's daily production in Nigeria is 650,000 barrels of oil per day, she said.
Chevron Corp., third-biggest producer, said the company has no plans to evacuate staff from the Niger delta.
``Most people are just evaluating what's going on,'' said Chevron spokesman Femi Odumabo, in a telephone interview from Lagos.
Escravos Attack
Last month, the militants kidnapped four oil workers from a Tidewater Inc. supply boat near the EA offshore field run by the Shell venture and held them for 19 days. They were released unharmed.
The militants said they attacked the pipeline at Escravos at 3:25 a.m. local time today. The state-owned pipeline feeds petroleum products to the northern city of Kaduna, the statement said.
Communities in the Niger delta, a maze of creeks and rivers feeding into one of the world's biggest remaining areas of mangroves, are among Nigeria's poorest, a Shell-funded report on the area said in 2004. It cited studies showing per-capita income in the region to be below the national average of $260. Unemployment surpasses 90 percent in some areas.
``All pipelines, flow stations and crude loading platforms will be targeted for destruction within the next few hours by our units,'' Gbomo said. ``This impromptu action is a direct consequence of the helicopter attacks on several communities in the region that has led to death and injury of numerous civilians.''
Militants Warning
The militant group, which calls itself Movement for the Emancipation of the Niger Delta, or MEND, said its attacks today were a response to raids by Nigerian military helicopters this week on the Gbaramatu area of Delta state. It said its forces would target all helicopters in the Niger delta and warned foreigners to leave the region. Today MEND warned foreign oil workers to leave the region immediately.
The militants say their aim is to win control of Nigeria's oil riches for the people of the Niger delta. Nigeria produced 2.36 million barrels of oil a day last month, making it the sixth- biggest producer in the Organization of Petroleum Exporting Nations last month, according to Bloomberg data.
MEND is also demanding that the Nigerian government release Diepreye Alamieyeseigha, the former governor of Bayelsa state, who was impeached and arrested on money laundering charges, and Mujahid Dokubo Asari, a militia leader who is in jail on treason charges.
Military Helicopters
Military helicopters departing from the Osubi airstrip operated by a Shell venture attacked suspected oil smugglers in the Gbaramatu area near Warri on Feb. 15, killing as many as 20 people, Lagos-based ThisDay newspaper reported yesterday.
When a helicopter resumed attacking the Gbaramatu area yesterday, militants fired on it, MEND said. That attack was confirmed by Nigerian military spokesman Major Said Hammed.
``Shell employees will pay a terrible price for the use of Shell facilities in the attack of communities in the Niger delta,'' Gbomo said in the MEND statement.
The U.S. State Department yesterday issued a travel warning, saying security has ``deteriorated significantly'' in the Niger delta.
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