Armed militants force Shell to shut Nigerian offshore oilfield
Friday, 20 June 2008

Royal Dutch Shell shut down production at its biggest offshore facility in Nigeria today, following an attack by armed militants, reports AP.

Shell’s Bonga oilfield, which produces 200,000 barrels of oil and 150 million cubic feet of gas per day, is located 75 miles offshore. It represents one of the world’s largest floating production storage and offloading vessels and deep water subsea infrastructure.

It started production in November 2005 and, until today, had largely escaped the violence that has forced Shell to periodically abandon large parts of its onshore production network in Nigeria, the bulk of which is in the troubled Niger Delta region.

The attack is the latest in a series targeting the Anglo-Dutch oil giant, but signifies a change of tack for oil militants, who tend to target facilities in the shallow creeks of the Niger Delta.
“It is the heart, the hub of the field,” a Shell spokesman said of the vessel hit in the attack.

A private security contractor working in the oil industry said around two dozen gunmen in three speedboats had attacked the floating facility, injuring three Shell staff, but failed to get inside it. During their escape, the attackers encountered another vessel off the Escravos export terminal and kidnapped its US captain.

Pipelines in the delta are exposed and unguarded, making them easy targets, but attacks on offshore facilities are more complicated to carry out and have been relatively rare. Oil companies have been focusing on offshore projects because of the unrest in the delta.

Shell, the largest operator in the region, took a $716 million (£363 million) charge last year and warned that it would have to cut operations because of insecurity and lack of state funding.

The Bonga field has helped offset losses from the delta, while Chevron’s Agbami and Total’s Akpo fields are due to come on stream this year. Shell has a 55 per cent interest in the field while Exxon Mobil has 20 per cent, Italian group Agip has 12.5 per cent and France’s Total has 12.5 per cent.

Violence in the delta has slashed Nigeria’s oil output since January 2006 by a quarter. Fears of supply disruption in Nigeria, the world’s eighth biggest oil exporter, have helped push global oil prices to record highs. US crude prices rallied to near $137 a barrel on Wednesday.

Angola has now outstripped Nigeria as Africa’s largest oil producer, according to OPEC figures.

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