Tuesday, June 8, 2010

Nigerian crude oil production outages


LONDON (Reuters) - Oil spills and sabotage are
reducing Nigeria's potential crude production by more than
600,000 barrels per day (bpd), according to oil companies and
industry sources.

A presidential amnesty last year led thousands of militants
to lay down their weapons, prompting a halt in attacks and
allowing oil companies to make repairs and ramp up output.

The success of the amnesty programme helped crude oil output
from Africa's biggest energy industry creep above 2 million bpd
in the early months of 2010, out of a potential capacity of 3

But incidents in the past month have led to fresh outages,
adding to production problems that have been going on for years.
Below are details of the latest disruptions to Nigerian oil

* ExxonMobil's (XOM.N: Quote) Nigerian unit last month discovered a
leak at one of its pipelines that delivers crude production to
its onshore storage and loading facilities in Nigeria's
south-eastern Akwa Ibom state.

The U.S. oil major declined to specify how much production
is down, but trade sources say the spill has reduced production
by as much as 150,000 barrels per day of benchmark Qua Iboe
BFO-QUA crude.

A company spokesman said the cause of the leak was
accidental and there was no evidence of sabotage.

* Royal Dutch Shell (RDSa.L: Quote) in May declared force majeure
on Nigerian Bonny Light BFO-BON crude oil liftings for May and
June as a result of leaks and fires on its Trans Niger pipeline.

Force majeure legally protects oil companies if they are
unable to meet contractual deliveries to customers due to
actions beyond their control.

The force majeure has since been lifted, but production of
benchmark Bonny Light is still around a third of the 500,000 bpd
averaged in 2005 due to dozens of output disruptions in the past
five years, mainly caused by sabotage attacks.

Bonny Light, a light crude popular with U.S. and European
refiners, was Nigeria's largest oil stream, but the onshore
production facilities are particularly vulnerable to sabotage.

* Shell also has a force majeure in place on its Forcados
crude exports. This has been in place on and off since sabotage
attacks grew in intensity about five years ago.

Forcados was Nigeria's second-largest stream in 2005,
averaging around 400,000 bpd. Production this month is expected
to average 220,000 bpd.

Facilities operated by Shell have been the worst affected by
militant attacks due to the ease of access that insurgents have
to its onshore pipelines and platforms.

Shell says the total volume of oil spilled in Nigeria from
its joint venture projects was almost 14,000 tonnes in 2009.
This is the equivalent of around 109,000 barrels.

* The International Energy Agency, adviser to industrialised
nations, said in its latest report that Nigerian crude oil
production was 2 million bpd in April this year.

Below is a table of known crude production outages in bpd,
based on information from oil companies and industry sources:

Field Operator Output Outage Latest Shut In
Bonny Light Shell 300,000 May 2010
Forcados Shell 180,000 Jan 2010
Qua Iboe ExxonMobil 150,000 May 2010
Total 630,000

(Reporting by Joe Brock; editing by Jane Baird)

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