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Vanguard (Nigeria): 500,000 bpd Nigeria crude to remain shut-in through 2007

By Hector Igbikiowubo

LAGOS — ABOUT 500,000 barrels per day of Nigeria’s crude oil output, representing a fifth of the country’s current total production, will remain shut-in through 2007 after the Royal Dutch Shell Plc foreclosed yesterday, plans to re-enter its operations in the western Niger Delta.

Ann Pickard, Shell’s Africa Regional Executive Vice President in charge of Exploration and Production, made the disclosure while speaking at an energy security conference hosted by Cambridge Energy Resources Associates in Istanbul, Turkey.

She noted that escalating violence in the Niger Delta had shut in at least 477,000 barrels per day in the last 18 months, adding that production was unlikely to commence from the affected fields this year.

“We won’t be back this year, we’re still working with the government to re-enter the Western Delta,” she said.

Nigeria’s shut in crude oil output topped one million barrels per day in May as violence pulled it to its lowest level since early 2003, the International Energy Agency disclosed in its June Oil Market Report.

IEA estimated average production during the month at 2.01 million b/d, down 245,000 b/d from April.

Production shut-ins in May reached a high of nearly 1 million b/d and averaged more than 800,000 b/d for the month.

IEA estimates Nigerian production capacity at 2.49 million b/d, excluding 545,000 b/d considered long-term shut-in, including that of Shell in the Western delta.

During May, the agency said, attacks on offshore vessels and onshore pipelines and pumping stations caused the following production cuts: Abiteye field, 55,000 b/d, now restored; Bomu manifold, attacked twice, 170,000 b/d, now restored; Funiwa field, 15,000 b/d, now restored; Akri and Oshi fields, 80,000 b/d, now being restored; Nembe pipeline leak, 77,000 b/d, still offline; Okono field offshore, 65,000 b/d, still offline; and Tebida field, 40,000 b/d, still offline.

IEA said security of oil industry workers remain “precarious” and noted that many non-Nigerian service companies had withdrawn from the Niger Delta.

It also cited Chevron Corporation’s withdrawal of nonessential offshore workers for a month because of security problems.

This month, following political developments seen as potentially disruptive, the UK advised its citizens to leave Bayelsa, Delta, and Rivers states.

On-going kidnappings and attacks on oil workers in the Delta have forced Shell to cut spending there by $100 million over three years, Pickard said. “We’ve been without production in the western part of the Delta for a year and a half now, so we’re looking at ways to consolidate jobs,” she said.
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