Shell Resumes Output from Nembe Creek in Nigeria

LONDON Jul 10, 2007 (Dow Jones Newswires)

Repairs have been carried out at the Nembe Creek trunkline located in the east of the Niger Delta, and output has restarted, a Royal Dutch Shell PLC (RDSB.LN) spokesman said Tuesday.

"Repair of the Nembe Creek trunkline has been completed recently and production has been resumed," said spokesman Rainer Winzenried.

Shell started repairs after a leak was found in May on the link, forcing it to cut output by 77,000 barrels a day.

The Shell spokesman was however unable to confirm whether the entire 77,000 barrels a day had been restored yet.

The Nembe Creek trunkline is one of Shell Petroleum Development Company's major crude evacuation facilities in the Niger Delta and serves the Bonny Light crude oil export terminal.

In a separate incident on July 7 two workers were kidnapped while repairing a leak on the Soku-Buguma crude oil trunkline located in the south of the Delta.

One of the workers taken hostage during this incident was employed by Shell Petroleum Development Co., or SPDC, while the other worked for Oil and Gas Nigeria, a pipeline repair contractor.

SPDC said Monday 16 leaks had been found on the Soku-Buguma trunkline within the last 60 days.

SPDC is a joint venture of which Royal Dutch Shell owns 30%. State-owned Nigerian National Petroleum Co. holds a 55% stake, Total SA (TOT) holds 10% and Eni SpA (E) unit Agip holds a 5% stake.

Nigeria is Africa's largest producer of crude oil but a wave of attacks by insurgent groups on oil installations have caused severe disruption to production.

If the Nembe Creek output is fully restored, the total output lost in Nigeria stands at 599,000 barrels a day according to Dow Jones estimates.

This total amount shut-in would represent about 24% of Nigeria's estimated effective production capacity of 2.5 million barrels a day. The output capacity is based on an estimate by the International Energy Agency.

Copyright (c) 2007 Dow Jones & Company, Inc.

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