Crude Oil May Rise as Nigerian Exports Cut byCrude Oil May Rise as Nigerian Exports Cut by Militant Attacks
Feb. 20 (Bloomberg) -- Crude oil may rise in London today after weekend attacks on facilities operated by Royal Dutch Shell Plc cut Nigeria's export capacity by about 20 percent and militants in the nation vowed to carry out further strikes.
Shell on Saturday, Feb. 18, closed and evacuated its EA offshore field, cutting output by 115,000 barrels a day, and suspended loadings at its Forcados export platform, which can ship 400,000 barrels a day. Shell can't say when Forcados may reopen, spokeswoman Caroline Wittgen said yesterday by telephone from London. Nigeria is Africa's biggest oil producer.
``The attacks are a concern given Nigeria's importance as an oil-producing nation,'' said Francisco Blanch, a senior oil strategist with Merrill Lynch & Co. in London. ``It's a factor that will keep prices supported.''
Brent crude for April delivery rose $1.10, or 1.9 percent, to $59.89 a barrel on Friday, Feb. 17, on London's ICE Futures exchange. Electronic trading in Brent starts at 9 a.m. Singapore time today. The New York Mercantile Exchange, the world's largest energy futures market, is closed today for a U.S. holiday.
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, according to Bloomberg data.
The militants, who also took nine hostages on Feb. 18, have said they want to cut Nigeria's export capacity by 30 percent this month. The Movement for the Emancipation for the Niger Delta said it targeted Shell because government military helicopters used an airstrip operated by the company to attack villagers in the delta, where the platforms are located.
`Fresh Targets'
``Fresh targets will be hit shortly,'' Jomo Gbomo, a self- described spokesman for the militants said yesterday in an e- mailed response to questions. ``There is no shortage of things to destroy.''
The militants issued a new warning late yesterday, saying oil workers should leave the Niger River delta ``immediately.''
``We will not take one more hostage in Delta state again,'' an e-mailed statement said.
The events in Nigeria are ``going to spook the market,'' said Fadel Gheit, an oil and natural gas analyst at Oppenheimer & Co. in New York. ``The market is going to go up, maybe 50 cents, a dollar, $1.20, depending on severity of the situation.''
The shutdowns may prompt OPEC, the 11-member group that pumps about 40 percent of the world's oil, to decide against cutting production when it meets next month in Vienna, analysts said. OPEC has traditionally cut production in the second quarter due to a decline in demand after the end of winter in the U.S. and Europe.
OPEC Targets
``If the 400,000 were to be shut down for a significant period of time, then OPEC would have to reassess what they were going to do at the meeting,'' said Adam Sieminski, Washington, DC-based chief energy economist at Deutsche Bank AG.
Qatar Oil Minister Abdullah bin Hamad al-Attiyah said yesterday OPEC still may cut production by as much as one million barrels a day from April 1, as rising temperatures in the northern hemisphere reduce demand for heating oil.
``If we need to cut at the next meeting, we will cut,'' al- Attiyah, 54, told reporters in Doha, Qatar, after a speech at a petroleum conference. ``I don't feel my customers are in a rush to buy more oil,'' he said.
Nigeria, the fifth-biggest oil supplier to the U.S., produces low-sulfur, or sweet, crude, prized by refiners for the proportion of high-value gasoline it yields. Shell, based in The Hague and the world's third-biggest oil company, produces about half of Nigeria's output.
Force Majeure
The U.S. received an average 1.1 million barrels of crude oil a day from the West African country last year, according to the U.S. Energy Department.
Shell will probably extend the force majeure it declared on exports from Forcados last month after the attack on the Trans- Ramos pipeline, Wittgen said. Force majeure is a legal clause that allows a company to miss contracted deliveries because of circumstances beyond its control.
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 Forcados after a Jan. 11 attack by the militants on the Trans-Ramos pipeline. No loadings were scheduled over the weekend at Forcados, Wittgen 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.
Exxon Mobil, Chevron
The militants say their aim is to win control of Nigeria's oil riches for the people of the Niger Delta.
Exxon Mobil Corp., the second-biggest oil producer in Nigeria, hasn't reduced operations in the country following Saturday's attacks, spokeswoman Susan Reeves said in a telephone interview from Houston Feb. 18. Exxon Mobil's daily production in Nigeria is 650,000 barrels of oil per day, she said.
Chevron Corp. is the third-biggest producer in Nigeria.