Posts from ‘January, 2006’

By Dino Mahtani in Lagos
Published: January 31 2006 02:00 | Last updated: January 31 2006 02:00
An escalation of violence in Nigeria's turbulent oil-producing delta region has left multinational oil companies wondering how sustainable their presence is in Africa's biggest oil producer.
In spite of the release of four foreign hostages who were abducted this month from an offshore field operated by Royal Dutch Shell, Nigeria's largest producer, industry officials and security analysts fear more attacks on oil facilities.
A group calling itself the Movement for the Emancipation of the Niger Delta (MEND) has claimed credit for several operations since December. They include the abductions and attacks on export pipelines and other oil facilities, which forced Shell to cut a 10th of Nigeria's oil production. MEND has promised more attacks, in spite of the hostage releases.
Nigeria deployed thousands of soldiers to the Niger Delta after an uprising by the delta's majority ethnic group, the Ijaw, forced a 40 per cent cut in the country's oil production in the run-up to elections in 2003.
Oil facilities are already guarded by police specifically seconded to the multinationals that have ploughed billions of dollars into joint venture agreements with the Nigerian government. Additional troops were intended to beef up security on critical export terminals as well as prevent the illegal theft of crude oil from pipelines and oil wells.
But Nigeria's taskforce is underequipped to guarantee the safety of the waterways. Nowa Omoigui, who lectures at the National War College, says at least 200 patrol boats are needed to patrol the delta's 112,000 sq km effectively. Nigeria has barely 25 boats that are appropriate for use in the delta.
This month's attacks against Shell facilities in the western delta was also accompanied by attacks on an oil platform belonging to Italy's Agip and a seemingly opportunistic raid on the company's corporate offices in the eastern delta.
“It would take a massive deployment of resources and manpower to secure the entire delta. As well as this, hostage rescue capacity is just not there. It's not difficult to sabotage the system,” says Dr Omoigui.
The military's lack of grip over the delta is compounded by the uneasy alliances it has to forge with local armed gangs. Many of the gangs were armed during Nigeria's military rule to act as local strong men, and again by politicians looking to rig elections in 1999 and 2003.
Meanwhile, many such armed groups operate as cartels in the illegal theft of crude oil from pipelines, alongside international criminal syndicates. Some industry estimates say up to 100,000 barrels a day is stolen.
Some estimates put conflict in the delta on par with Chechnya and Colombia. But analysts say improvements to Nigeria's military capabilities would have to be introduced in tandem with political change to avoid the “high-intensity conflict” that could force multinationals offshore by 2008, as predicted by a report commissioned by Shell and leaked in 2004.
Ijaw leaders say the government has failed to tackle poverty among their people who straddle the oil wealth that is pumped from their tribal lands. Resentment against the government is intertwined with ill-feeling against oil companies whose land acquisition and hiring policies often fuel local conflict.
With many delta constituents still talking of rigging by security forces during the 2003 elections, oil companies are watching closely to see how Nigeria's ruling party handles its internal divisions in the run-up to polls in 2007.
A UK parliamentary committee that visited the delta late last year said the delta's “simmering tensions are likely to explode unless steps are taken to rectify the deep-seated causes of conflict”.

By Carola Hoyos
Published: January 31 2006
Lukoil, Russia's biggest oil company, is on the verge of reopening negotiations with Iraq on the Arab country's most lucrative oil development contract.
Leonid Fedun, Lukoil's vice-president, said: “This year we will be able to start specific negotiations to develop fields.” He added: “2006 for us is the year that we are very optimistic. Finally we have a legitimate government in Iraq.”
Lukoil has the major stake in the $3.8bn (€3bn, £2bn) West Qurna oilfield, for which it signed a contract in 1997. But Saddam Hussein, Iraq's former president, severed the contract in late 2002, shortly before the US invasion that toppled him.
Mr Fedun said Lukoil, which has set up an office in Baghdad, expects the contract to be honoured. “We have running contact. It proves that, unlike western companies, we are willing to work under any circumstances,” he said.
Iraq is believed to have the world's second largest oil reserves, after Saudi Arabia. But its fields are underdeveloped. International oil companies, such as Europe's Royal Dutch Shell, Total and BP and ExxonMobil and Chevron of the US, are keen to help develop the fields.
These companies are finding it difficult to discover large new fields and face political challenges to investing in many oil-rich countries. But they have all also said that the bombings and hijackings in Iraq make it too dangerous to send large numbers of their employees to the country.
Lukoil is hoping to benefit from their caution.
“It looks like Russians have a different definition of risk,” Mr Fedun said. Vagit Alekperov, Lukoil's president, had been to Baghdad several times in the past two years – a claim not one leader of a western oil company could match, he said.
West Qurna is believed to hold as many as 11.3bn barrels of oil and is expected to produce 600,000 barrels of oil a day, the same as the entire production of Qatar, the smallest member of the Organisation of the Petroleum Exporting Countries.
“It is a huge contract and we don't need anything else, provided it is realised,” Mr Fedun said.
But analysts warned Iraq still had much to sort out before it would be able to sign any legitimate large oil deal. It is still unclear whether the power to sign oil contracts will rest with Baghdad or the provincial governments. There is still no petroleum law governing foreign investment and no model contract, one analyst pointed out.
Once these issues have been sorted out, Iraq will have to decide if it would rather sign such a large development deal with US and European oil companies that have the most advanced technology and knowhow, or with Lukoil, which would be willing to start work more quickly.
(ConocoPhillips, the US oil company, has a minority stake in Lukoil.)

By Khozem Merchant in Mumbai
Published: January 31 2006
India’s state-owned Oil and Natural Gas Corporation has agreed to pay $1.4bn to buy ExxonMobil’s 30 per cent stake in a field in Brazil’s Campos Basin, securing its first asset in the region after a string of setbacks.
ONGC officials say its offer has been approved by the Indian government.
The stake represents the company’s most valuable overseas asset since it paid $2.7bn for 20 per cent of the ExxonMobil-operated Sakhalin-1 project in Russia’s western Siberia region in 1998.
Speaking to the Financial Times, a senior ONGC official described the acquisition as “a highly prospective field”.
ONGC’s acquisition of the stake in the project means it will gain as partners Petrobras, the Brazilian state-owned company, and Royal Dutch Shell, the Anglo-Dutch energy group, both of which hold 35 per cent stakes in the field.
Final agreement is subject to pre-emption rights that must be exercised in the next month. Last night ONGC officials were confidently expecting a rapid conclusion to the transaction.
ONGC’s success came as Subir Raha, chairman, held a first round of talks with Murli Deora, India’s new petroleum minister.
Mr Deora has pledged to continue the Indian government’s widely applauded efforts to strengthen the country’s energy security through a strategy of aggressive “energy diplomacy” and alliances.
ONGC’s role in Campos Basin will align it with Petrobras, whose upstream exploration expertise is valued in New Delhi. Brazil’s president has spoken of India as a future energy partner for Latin America’s largest economy.
“This is not only a first move in a promising region; it also puts ONGC in a partnership with companies that has potential to grow elsewhere,” said Madhu Nainan, of Petrowatch, an energy industry publication in Mumbai.
ONGC’s earlier effort to achieve a presence in the region failed when it was outbid by Chinese rivals for assets in Ecuador. The Indian group has interests in Sudan, Libya, Myanmar, Iran, Iraq and Syria.

By Dino Mahtani in Lagos
Published: January 31 2006 02:00
Nigerian ethnic militants released four expatriate oil workers yesterday, ending a 19-day hostage crisis amid renewed threats on oil facilities in the world's eighth largest exporter.
The hostages were abducted from an offshore oilfield in the turbulent Niger Delta region among a wave of attacks since December that have killed dozens of people and forced Royal Dutch Shell to cut Nigerian output by a tenth.
The Movement for the Emancipation of the Niger Delta (MEND), a group that claims responsibility for the kidnapping of the American, British, Bulgarian and Honduran Shell contractors, said it released the hostages on “humanitarian grounds”. An e-mail believed to be from a representative of MEND said the group would nonetheless ensure a “February target of a 30 per cent reduction in Nigeria's export capacity”.
Shell, Nigeria's largest producer, said yesterday that 106,000 barrels per day of production feeding its Forcados export terminal was still cut, after an explosion on a large export pipeline this month. Production at Shell's 115,000 bpd EA field, where the hostages were taken, resumed on Saturday but officials could not confirm when it would reach full capacity. The company said a force majeure was still in effect.
Shell has withdrawn about 500 workers from its facilities in the delta since this month's attacks, and oil unions have also threatened to withdraw their staff if security is not improved.
Industry and security officials say Nigerian security forces do not have the capability to guarantee the complete safety of the network of pipelines, oilfields and several hundred oil wells dotted around the swamps and creeks of the Niger Delta, where most of Nigeria's oil is produced.
“In any case, there needs to be a political solution to the Niger Delta crisis,” said Dimieari Von Kemedi, a political and security analyst.
MEND claims it is fighting for the rights of the Ijaw, the most populous tribe in the delta. Ijaw community leaders and militants say the Nigerian state has marginalised their people in spite of the huge oil wealth pumped from their tribal lands.
Heightened political tensions across Nigeria in the run-up to elections in 2007 are likely to feed into the crisis in the delta, where hundreds of people die in ethnic fighting, political violence and street crime each year.
An Ijaw uprising ahead of elections in 2003 forced Nigeria to cut 40 per cent of its production.

The amount is the largest by any U.S. company, analysts believe
By LYNN J. COOK
Exxon Mobil Corp. posted a profit of $36 billion on sales of $371 billion for 2005, making it the best year the energy company has ever had.
In fact, Exxon Mobil's massive year-end earnings make it the most profitable year on record for any company in U.S. history, according to Standard & Poors, thrilling many analysts and investors and outraging some consumer advocates.
Exxon Mobil's stock price popped $1.82 per share on the news to close at $63.11 on Monday. Deutsche Bank analyst Paul Sankey said the company handily beat all the forecasts on profits.
“Today's result has surprised even bulls such as ourselves,” he said.
But while most on Wall Street rejoiced, many consumers stewed.
The Foundation for Taxpayer and Consumer Rights issued a statement claiming Exxon Mobil unfairly profited from hurricanes Katrina and Rita, echoing the sentiments of many of those with gripes about gasoline prices.
“No oil company should be allowed to reap world record profits from one of the nation's worst natural disasters,” FTRC President Jamie Court said.
Company execs have said they worked tirelessly to keep as much gasoline pumping into the market as they could in anticipation of the storms. In the aftermath, the company imported an extra 1 million barrels a day from Europe to fill the gap between supply and demand.
Taking out ads
Exxon Mobil and several other energy companies, including Royal Dutch Shell and ConocoPhillips, were the target of a widely publicized hearing on Capitol Hill in the fall where elected officials questioned their profits in the wake of the storms.
So the company anticipated the complaints.
Exxon Mobil took out full-page advertisements in several major newspapers on Monday, including the Houston Chronicle, New York Times and Washington Post, in an effort to defend profits and anticipate consumer questions.
The ad argues that, as a group, energy companies' profits are not out of line with other industries. Oil and natural gas companies earn, on average, 8.2 cents for every dollar of sales. A lot of other industries — from software to semiconductors and banking to biotechnology — make more money on every dollar sold.
But Exxon Mobil, which focuses intensely on efficiency, is a better performing company than the typical oil outfit.
For 2005, the company made 9.7 cents on the dollar, which an industry lobbying group pointed out was better than some big names but not as good as others. According to the American Petroleum Institute, Pepsi made 3.4 cents on every dollar. And GE made 7.5 cents per dollar. But those with higher profit margins include Big Mac-purveyor McDonald's, which made 11.6 cents on the dollar; Viagra-maker Pfizer, which made 20.1 cents on every the dollar; and Internet giant Yahoo, which made 45.5 cents on every dollar.
Exxon Mobil's 2005 profits are up 42 percent over 2004, but today American drivers are shelling out about 25 percent more than they were a year ago for a gallon of regular unleaded gasoline, according to the AAA price survey.
John Lowe, an energy economist and professor of law at Southern Methodist University, said that means consumers see oil companies as getting richer while their own pocketbooks are getting emptied.
“This should be no surprise,” he said. “When you take a very large company and then triple the market price that people pay for their product in a period of four years then you get huge profits. This is a phenomena of high oil prices. And it should be apparent that Exxon Mobil is not setting the price of oil. It's set by world markets.”
Exxon Mobil's sales and profits look especially large because of the scale of the industry.
Just how big is Exxon Mobil? Its $371 billion in sales last year make it, far and away, the biggest publicly traded company in the U.S. Not even Wal-Mart comes close.
If Exxon Mobil were a country, it would rank among the world's top 30 economies, ahead of more than 200 nations, including Saudi Arabia, Switzerland and Hong Kong.
Exxon Mobil has long argued that its international size and scope can often be difficult for the average consumer to grasp. The technological costs of finding and producing more crude oil and natural gas out of the ground are huge, too. Last year, Exxon Mobil spent $18 billion on exploring for more oil and revamping refineries to process more crude.
Buying stock back
Critics say they could have spent more. Last year Exxon Mobil put almost that much — some $16 billion — into buying back its own stock, which makes every shareholders' stake in the company more profitable. It's a program that makes Wall Street happy but, in effect, is slowly liquidating the company.
Ted Harper, an energy analyst at Frost Bank, said there's a Catch-22 at work in the energy world.
Oil is becoming harder and more expensive to find but demand is climbing. So the price goes up. And yet large companies have a tough time winning the right to drill in some of the most promising areas.
“If you're the size of Exxon, where do you go? To some extent they are sitting on cash because it's difficult to redeploy it at high returns,” Harper said.
“This speaks to the fact that, fundamentally, this is actually a tough time in the industry. Other companies are beginning to deploy more capital into alternatives like solar. At some point in time, energy as we know it will migrate into some other form.”

ljcook@chron.com

DANIEL BALINT-KURTI
Jan 30, 2006
Oil giants are likely to continue investing billions of dollars in Nigeria, even though a rash of recent militia attacks and kidnappings could mean violence is on the rise.
The past two months have seen militias blow up oil pipelines and launch attacks on two oil platforms run by Nigeria's main crude producer Royal Dutch Shell. Armed gangs also robbed two oil companies last week, making their getaway in speedboats.
Four foreign oil workers were kidnapped and held for nearly three weeks until their release Monday. It was the second-longest kidnapping during over a decade of unrest in the Niger delta area, where poor local communities complain they get little benefit from the oil riches flowing from their land.
Much of the violence, though, appears less political than criminal. Gangs who tap into pipelines steal tens of thousands of barrels a crude a day. The oil thieves may be getting bolder as their illicit wealth allows them to buy more and more weapons.
Rights campaigner Demieari Von Kemedi in the delta city of Port Harcourt says top Nigerian power brokers and security forces collaborate with the oil thieves. Although the Nigerian government has denied allegations of collaboration, two top navy officials were court-martialed last year for involvement in oil theft.
Another reason for the recent upsurge in attacks may be reaction to renewed government determination to quell unrest. Nigerian President Olusegun Obasanjo has declared that “stability will be returned to the oil region.”
The arrest in September on treason charges of Mujahid Dokubo-Asari, the delta's most prominent militia leader, marked the start of a new crackdown on breakaway groups. Dokubo-Asari's campaign for independence for the over 8 million Ijaws that dominate the Niger delta is fueled in part by complaints that southerners see too little benefit from oil.
Another prominent Ijaw, Diepreye Alamieyeseigha, also was recently jailed. Alamieyeseigha is a former Bayelsa state governor who fled money laundering charges in Britain in November before being arrested in Nigeria. Alamieyeseigha is a member of Obasanjo's ruling party, but had increasingly found himself at odds with the president over demands that the Ijaw get a greater share of oil revenues.
Dokubo-Asari and Alamieyeseigha both were seen as conduits of funds to militant groups. Their arrests may have dried up the flow of cash, angering militants.
The recent attacks forced Shell to shut down nearly 10 percent of the OPEC member nation's 2.5 million barrels-per-day oil output and evacuate over 300 workers. However, company spokesman Andy Corrigan said that Shell “expects to continue to be a major player in Nigeria in the years to come.”
Unrest here, together with worries over the nuclear standoff in Iran, have been pressuring world oil prices upward. At a time of high prices and diminishing reserves, Nigerian oil blocks remain attractive, said Antony Goldman, Africa analyst at London-based oil consultancy Clearwater Research.
“Nigeria, for all its difficulties, offers quite a bit,” Goldman said, citing the country's expanding oil production capacity and the rapid growth of the natural gas industry.
Nigeria has the world's seventh largest proven reserves of natural gas. It is the fifth largest provider of crude to the United States.
The major investments now are in deep offshore fields, considered much safer than the onshore facilities currently accounting for the bulk of Nigeria's oil. The newer projects are much further from the coast and harder for militants to reach.
Multi-billion-dollar investments by Anglo-Dutch Shell and ExxonMobil of the United States and others are likely to raise oil exports from just under 2.5 million barrels per day now to over 3 million by mid-2007, security conditions permitting, Goldman said. The Nigerian government aims to increase oil production to 4 million barrels per day by 2010.
Nontraditional partners, including China and India, have been striking huge deals in Nigeria's petroleum sector. Earlier this month, the China National Offshore Oil Corporation announced a US$2.27 billion acquisition of a share in an oil block.
Chronic poverty and oil pollution have stoked the delta's regular violence over the past decade. Peaceful dialogue took a blow in 1995, when writer Ken Saro-Wiwa and eight other activists from his Ogoni tribe were executed under the brutal regime of the late dictator Gen. Sani Abacha. They were hanged for the murder of four political rivals, but Saro-Wiwa's supporters say he was really targeted because he led protests against environmental damage by Shell.
Since then, there have been countless local community protests.
Abel Oshevire, a spokesman for the regional Delta state government, says that local authorities are trying to find a permanent solution by tackling key issues such as poverty and education. But the regional government needs to be given control of oil resources, and to have much more money, says Oshevire.
Critics say that, with 13 percent of oil revenues flowing back to them, oil-producing states have plenty of money, but that governors squander or steal it.
Rights campaigner Von Kemedi said he is worried the military may eventually step in. On previous occasions, the army has responded to the killing of security forces or government officials with “punitive raids,” in which villages are razed and dozens, even hundreds, massacred. Concern for the hostages most likely prevented a major crackdown this time around.

Jan 30, 2006
Today Shell marked the re-opening of its downtown New Orleans offices with a community ceremony at One Shell Square that included Shell employees, civic and political leaders, and business partners.
“Like so many other businesses, Shell left its headquarters in the Central Business District in preparation for Hurricane Katrina five months ago,” said Marvin Odum, Executive Vice President, Shell Exploration & Production – who heads the Americas. “Many of our New Orleans team relocated to temporary offices in Robert, Louisiana and Houston. And other dedicated employees were able to return to other Shell offices and facilities in the region, working hard to deliver energy to the country during an otherwise chaotic time. Yet throughout it all, the Shell commitment to the region has remained firm.”
“Approximately 250 New Orleans-based Shell employees returned home today. Another 750 employees will follow the week of February 20th,” said Frank Glaviano, Vice President – Production, Americas Region. “These individuals and their jobs represent important contributions to the emerging economic recovery of the region and its community fabric. Shell is one of the largest New Orleans Central Business District employers and employs more than 4,000 people in the State.”
Odum was joined by Henri Wolbrette, Chairman of the New Orleans Police Foundation, who was presented with a donation of $500,000 to address immediate housing needs for police officers, firemen and EMS personnel.
“Shell's generous donation to the New Orleans Police Foundation will go a long way toward helping the brave men and women of New Orleans Police Department and other first responders re-equip, re-build and restore their lives,”' said Wolbrette. “When these individuals have a home to return to at the end of the day, they're better able to serve and protect our community.”
Also represented at the ceremony were dozens of business leaders and scores of downtown neighbors.
“New Orleans has steadily been returning to business,” said Kurt Weigle, Executive Director of the Downtown Development District, “But the Shell return to One Shell Square is an exclamation point for all of us. The Shell commitment sends an important message: Downtown New Orleans is back in business!”
“All of us must now adapt to a 'new normal' in New Orleans,” continued Odum, “and I'm proud that Shell has been a leader in bringing together the community organizations, businesses of all sizes, and the enthusiasm of countless individuals to contribute to the steady momentum of rebuilding.”
Shell Oil Company, including its consolidated companies and its share in equity companies, is one of America's leading oil and natural gas producers, natural gas marketers, gasoline marketers and petrochemical manufacturers. Shell, a leading oil and gas producer in the deepwater Gulf of Mexico, is a recognized pioneer in oil and gas exploration and production technology. Shell Oil Company is an affiliate of The Shell Group, which operates in over 140 countries and territories employing more than 112,000 people.
Disclaimer statement:
This announcement contains forward-looking statements, that are subject to risk factors associated with the oil, gas, power, chemicals and renewables business. It is believed that the expectations reflected in these statements are reasonable, but may be affected by a variety of variables which could cause actual results, trends or reserves replacement to differ materially, including, but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, risks associated with the identification of suitable potential acquisition properties and targets and the successful negotiation and consummation of transactions, the risk of doing business in developing countries, legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.
Please refer to the Annual Report on Form 20-F for the year ended December 31, 2004 (as amended) for a description of certain important factors, risks and uncertainties that may affect the Shell Group's businesses. Neither Royal Dutch Shell plc nor any member of the Shell Group undertakes any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or other information.
Cautionary Note to US Investors: The United States Securities and Exchange Commission ('SEC') permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as “expected producible resources” and “amount of reserves we expect to produce”, that the SEC's guidelines strictly prohibit us from including in filings with the SEC.Shell E & P Fred Palmer, 504-728-4407 (office) 504-232-2027 (cell) Shell US Media Line: 713-241-4544 www.shell.com/us/sepco

Mon Jan 30, 5:15 PM ET
WASHINGTON (Reuters) – Officials from six major oil companies have refused to testify this week at a Senate hearing looking into whether oil industry mergers in recent years have made gasoline more expensive at the pump.
With oil companies reporting record profits from higher energy prices, consumer groups have complained that mergers in the industry have stifled competition.
Exxon Mobil said on Monday it earned $10.7 billion in the fourth quarter of last year and $36.1 billion for all of 2005 — bigger than the economies of 125 countries.
The Senate Judiciary Committee, which is holding the hearing on Wednesday morning, said it asked representatives from Exxon Mobil, Chevron, ConocoPhillips, Valero Energy and the U.S. units of BP and Royal Dutch Shell to tell their side of the story.
“All declined the invitation to testify,” the committee said in a statement on Monday, without providing details.
The companies, with the exception of Valero, took a beating at a Senate hearing last November on the industry's soaring profits at the time and high energy prices.
Bill Kovacic, a member of the Federal Trade Commission, is scheduled to testify at Wednesday's hearing.
The FTC is investigation whether oil companies manipulated gasoline prices and oil refining production levels. The agency plans to finish its probe and send its findings to Congress this May.
Connecticut Attorney General Richard Blumenthal will also testify.
The price for gasoline jumped 2.1 cents over the last week to a national average of $2.36 a gallon, up 45 cents from a year ago, the government said on Monday.

Four expatriate oil workers abducted by gunmen from a Shell Petroleum Development Company facility in Nigeria nearly three weeks ago were handed over to Shell's managing director on Monday, hours after their release.
The four, named as Briton Nigel Watson-Clark, Bulgarian Milko Nichev, Harry Ebanks from Honduras and U.S. national Patrick Handry, were released in Yenagoa, capital of Bayelsa State, before being welcomed by Nigerian President Olusegun Obasanjo.
Handing the freed hostages over to Shell managing director Basil Omiyi, Obasanjo said his administration would not be blackmailed by criminals.
'No self-respecting government will give into blackmail, intimidation or threat,' he said. 'This incident only exposed them (the militants) for what they are…criminals. I hope they have seen the futility of their actions.'
He added that his government was working on a new strategy to prevent similar kidnappings in future.
'I want to assure you and the international community that we will try to prevent the recurrence of this kind of incident,' he told the hostages, while appealing to the media 'to stop glorifying people who have done bad, you are undermining the security of the country.'
The kidnappers, a previously unknown militia group called the Movement for the Emancipation of the People of the Niger Delta, originally said it would only release the men if the government freed two detained leaders of the ethnic Ijaw group.
A Foreign Office spokesman in London confirmed the release earlier Monday, saying: 'The men are free. They are in the hands of Nigerian officials.'
Earlier, Nigerian Army Major Said Ahmed, spokesman for 'Operation Restore Hope,' a special military unit aiding police in the Niger Delta, had also confirmed the release.
The kidnappers were reportedly demanding ransom money as well as the release of two people currently on trial in Abuja.
Reports in London said the kidnappers' conditions were not met before the hostages were released.
The abductors were demanding the immediate release of the impeached governor of Bayelsa State, Diepreye Alamieyeseigha, on trial for embezzlement while in office.
It also demanded immediate freedom for a militant separatist leader, Mujahid Dokubo-Asari, who is standing trial for treason.
Dokubo-Asari led a bloody uprising in the Niger Delta in 2004 in a crusade to demand that Nigeria's oil resources be controlled by the oil-rich Delta region.
Nigeria's oil industry has been the target of militant attacks in recent weeks, with a January 15 bombing attack on Shell houseboats killing 13 people.
Gunmen also stormed the premises of another oil company in Port Harcourt over the weekend and stole the equivalent of 300,000 dollars.
The southern Niger delta is home to 90 per cent of Nigeria's oil reserves, making the populous West African nation one of the world's biggest oil exporters.
But some 20 million residents of the delta region have long complained they were not benefiting from the oil wealth, and that the pollution from frequent oil spills and gas flares had damaged the soil on which they rely for farming.

By Finbar Dwyer – WSM – Workers Solidarity 90 Monday, Jan 30 2006, 1:59pm

Rossport – Go west (and make Shell go offshore
Though the issue of the Rossport pipeline was last in the news when the the five local men were released from prison, the conflict with Shell hasn't gone away. Since then the government commissioned a report, which essentially whitewashed Shell and gave the go ahead to build this dangerous pipeline.
The people of Rossport, however, are not lying down in the face of either the multinational or government. Last summer they stopped Shell from carrying out pipeline work. This summer the plan is the same. Safety is not negotiable.
Five years ago when Shell decided to push ahead with this pipeline it was clear it wasn't safe. Five years later, government reports or bullying a small community will not change this fact. It wasn't safe then and it isn't safe now.
Beyond safety, the Shell is ripping us off. Five years ago Shell got the deal of a century when our esteemed leaders gave them the entire gas field and then paid them to build the refinery by giving them massive tax breaks on all their construction work. If it was a rip-off then, it's still a rip-off now.
Shell are aware that they face a very strong campaign and so have been sending out fancy leaflets all across Mayo telling people how safe the pipeline is. They are getting ready for a big push to have it built this spring.
The local Campaign is also preparing too. Last autumn a delegation went to Norway to successfully publicise the complicity of Statoil, who own the second largest stake in the field.
At the moment there are several people preparing a camp site in Mayo to facilitate people who want to go and show solidarity. The camp is opening on February 25th and is for all interested in showing solidarity with the people of Rossport.
In this sparsely populated area the campers will help with the continuous picket which makes sure that Shell don't start their pipelaying. If you have a few days to spare, come to Mayo and help with the blockades. If you can't get to Mayo, you can get in touch with your local 'Shell to Sea' group.
For more information about the camp contact Bob 0863201612. http:// www.shelltosea.com