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Nigerian Militants Move Oil Attacks Offshore

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Niger Delta, Nigeria
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ABUJA, Apr 05, 2006 (Dow Jones Commodities News Select via Comtex)

Western oil companies operating in Nigeria's deepwaters have experienced isolated but unsuccessful attacks on facilities, as militants begin to take their battle against foreign firms far offshore, participants in an oil conference said Tuesday.

Militants in the Niger Delta, the country's oil-producing hub, have launched a series of assaults in the past five months that have centered on onshore and shallow-water facilities in an attempt to gain more control over oil supplies.

The attacks have knocked out at least 20% of Nigeria's oil output, pushed up global oil prices - the front-month May crude contract on the New York Mercantile Exchange was trading at $66.25 Tuesday - and kept oil markets on edge about future supply disruptions in Africa's biggest oil-producing country.

Energy companies operating far offshore, where an increasing proportion of the country's oil and gas supplies comes from, have also seen attacks on their facilities, said an analyst at the energy conference in Nigeria's capital, Abuja.

"(The deepwater areas) are being pushed. We have already seen some unreported incidents far offshore," said Rolake Akinola, Africa analyst at consultants Control Risks.

"We can't guarantee that pirates won't be able to (regularly) go 50-60 kilometers offshore" in the future and attack platforms, she said.

Akinola, who advises companies about the risks of doing business in African countries, didn't say which companies had been targeted or how many attempts had been made on offshore facilities.

An executive at a major Western oil company told Dow Jones Newswires he had heard of some isolated and failed assaults happening far offshore and said his company was taking measures to protect its facilities in Nigeria's deepwaters.

"(The militants') capabilities are increasing all the time. We have to be prepared," the executive said.

Nigeria's offshore waters are an important driver of the country's future oil and gas production.

A Citigroup report in February emphasized the importance of Nigeria's deepwater, often more than 50 kilometers offshore and reaching depths of 2,000 meters, as an oil source and as a barrier to attacks.

"Clearly most of the (oil production) growth near-term looks to be in the Nigerian deepwater and as such should be less subject to current disruptions," the report said.

"The Nigerian deepwater currently has 6 billion barrels of discovered reserves - just 16% of the country's total. However, it is expected to be the driver of over 90% of the country's reserves upside," it said.

The Gulf of Guinea holds the offshore waters of Nigeria and Angola, and is touted by energy analysts as the world's next big oil-producing region.

The Gulf of Guinea is already the world's top producer of light, sweet crude oil, according to Mohamed Barkindo, acting secretary general of the Organization of Petroleum Exporting Countries.

Barkindo, a Nigerian, told the energy conference Monday that the Gulf overtook the North Sea in 2005 as the biggest producer of crude oil light in density and low in sulfur. This crude oil is prized in Western oil markets because of its high gasoline content and the relative ease of refining it into gasoline.

The recent oil supply disruptions and tensions in the Niger Delta have been particularly disconcerting to the U.S., which is the world's largest importer of Nigerian oil and buys 40% of the country's total exports.

Security analysts have said the nature of strife in the impoverished Niger Delta, a swamp roughly the size of England with around 20 million residents, has changed dramatically in recent years because of the lucrative oil-theft trade that has given militants the cash to buy sophisticated, military-style weapons and speedboats capable of carrying at least 25 people.

The Nigerian military's increased presence in the Delta to protect oil facilities has often irked local communities and added to tensions with militant groups.

Oil theft, referred to as bunkering and sometimes carried out with the complicity of military officials, has caused Nigeria to lose up to 300,000 barrels a day of oil, as well as billions of dollars in government revenues.

(C) 2006 FWN Select. All Rights Reserved

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