LONDON May 08, 2007 (Dow Jones Newswires)
Militants in Nigeria stepped up their post-election violence early Tuesday by attacking oil pipelines operated by Italy's Eni SpA (E), though its potential to drive the country's oil production sharply lower may be eased through the intervention of the state-run oil company.
The Movement for the Emancipation of the Niger Delta said in an e-mail to Dow Jones Newswires that militants had successfully damaged onshore pipelines in Bayelsa State operated by Eni subsidiary Agip that feed the offshore Brass oil export terminal.
A loading at the Brass terminal is thought to be progressing as normal Tuesday, using stored crude.
A London-based trader said the next full 950,000 barrels cargo of crude from the terminal isn't due to load until late May.
Eni confirmed later that two of its pipelines were attacked and that it had shut down production at its Akri and Oshi fields as a precaution.
It added that it had already begun to repair the damaged pipelines.
Eni wouldn't say how much production is affected by the latest attacks.
"It's early days so I think most of the market is sitting back to gauge whether there will be serious impact to supply before trading," a trader of West African crude said.
"This marks a step up in violence that surely makes crude look cheap," another trader said.
Oil prices climbed on the news and at 1232 GMT U.S. light, sweet crude was up 35 cents at $61.82 a barrel, with Brent in Europe 59 cents higher at $65.03 a barrel.
Chief Joshua Benemesia, the head of a government-backed anti-piracy force, confirmed the attack with members of the Bayelsa State volunteers who were stationed in the two areas attacked, Associated Press reported.
It added that a private security contractor confirmed that a large oil slick was spreading down a river from the Brass area.
Oil traders said the Brass terminal currently ships some 160,000 barrels a day.
In the last week, some 120,000 barrels a day of production has been affected after militants attacked an offshore production and storage vessel and a Chevron Corp. (CVX) offshore facility.
Almost 700,000 barrels a day, or 28% of Nigeria's effective crude production capacity, has been held back by attacks prior to Tuesday's assaults.
Traders of West African crude are confident the Nigerian National Petroleum Corp. will, if necessary, replace crude production lost in recent days with supply from other fields.
"At the switch of a button we could see more crude coming in to the market from other fields," a London-based trader said.
There are a number of fields capable of producing more than they currently offer, traders said, which means the market could see more cargoes of crude grades Qua Iboe, Amenam, Bonga, Erha or Yoho available in May.
In the e-mail to Dow Jones Newswires, MEND said there were no deaths and that no oil workers were kidnapped in the attacks.
The militants say they are fighting for control of oil resources and for the release of some of their leaders who were jailed over a year ago by the Nigerian government on treason and corruption charges.
The group frequently sends e-mails to the media about its attacks on oil infrastructure, the details of which are later verified by companies and the government.
Kidnappings of foreign oil workers have surged in the wake of Nigerian presidential elections last month which saw the ruling party keep its grip on power.
The elections were regarded as flawed by international observers and opposition parties.
MEND Tuesday also e-mailed pictures of the hostages it took from the Chevron platform last week.
It named them as John Stapleton of the U.S., Ignazio Gugliotta, Alfonso Franza, Raffaele Pascariello and Mario Celentano of Italy, and Jurica Ruic of Croatia.
TABLE OF ESTIMATED SHUT-IN NIGERIAN OIL OUTPUT (Output in barrels a day) FACILITY COMPANY LOST OUTPUT RETURN DATE Forcados Terminal & EA Platform SPDC -a 477,000 1H '07 -b Ekulama-1 Flow Station SPDC 9,000 n/a (Cawthorne Channel) Olero Creek CNL -c 70,000 n/a Funiwa CNL 15,000 n/a Ebite Flow Station CNL 42,000 n/a (locale unavailable) Agip 15,000 n/a Okono and Okpoh Agip 65,000 n/a TOTAL 693,000 -d a. SPDC is the Shell Petroleum Development Co., a joint venture operated by Shell, which owns 30%, and with the Nigerian National Petroleum Co. with 55%, Total SA (TOT) with 10% and Eni SpA (E) unit Agip SpA with 5%. b. Estimate from Shell and Nigerian oil ministry. c. CNL is Chevron Nigeria Ltd., which is a joint venture operated by Chevron Corp. (CVX), which owns 40%, and NNPC with 60%. d. Total amount shut is 28% of Nigeria's estimated effective production capacity of 2.5 million barrels a day. The output capacity figure is based on estimates from International Energy Agency.
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