Nigeria Says Strike, Attacks Cut Oil Output in Half

Bloomberg: Nigeria Says Strike, Attacks Cut Oil Output in Half (Update2)

By Julie Ziegler and Dulue Mbachu

April 25 (Bloomberg) — Nigeria is losing about 50 percent of its current oil production because of a strike at Exxon Mobil Corp.’s operations in the country and militant attacks on a Royal Dutch Shell Plc pipeline, the country’s oil minister said.

Petroleum Minister of State H. Odein Ajumogobia said in an interview in Abuja that he held a meeting with union leaders today in an effort to end an oil workers union strike against Exxon Mobil’s Nigeria unit. He said he expects to hear back from the union this evening.

“I don’t know what’s driving this new wave of militancy,” Ajumogobia said of the attacks. “It’s one day. We’ll take each day as it comes.” The production losses are temporary, he said.

Nigeria, Africa’s leading oil producer, pumped 1.96 million barrels a day in March, according to Bloomberg estimates. Recent attacks on Shell-run pipelines, including the latest one, is cutting oil flows by about 140,000 barrels a day, Ajumogobia said. A union official estimated the Exxon Mobil strike is halting about 765,000 barrels a day.

The Nigerian supply losses helped push June crude oil futures as high as $119.55 a barrel on the New York Mercantile Exchange.

Exxon Mobil’s Nigeria unit began an “orderly shut in of production” after workers from one of the country’s biggest oil unions went on strike yesterday, Gloria Essien-Danner, a spokeswoman for the Exxon unit, said. She declined to say how much production was affected by the action.

Pengassan Strike

About 90 percent of Exxon’s Nigerian output of about 850,000 barrels a day is halted, said Olusola George-Olumoroti, chairman of the branch of the Petroleum & Natural Gas Senior Staff Association of Nigeria, or Pengassan, that’s taking action against Exxon. He expects all the company’s production to be halted by the end of the day.

“We’re still trying to work through it,” Ajumogobia said today, after meeting with Pengassan officials, adding that he hoped to resolve the matter “soon.”

Elsewhere in Nigeria’s southern oil region, armed militants belonging to the Movement for the Emancipation of the Niger Delta, or MEND, said they sabotaged a pipeline belonging to Shell’s Nigerian unit, the latest of several such bombings this month.

Shell said it got indications from community contacts that an incident has taken place, Rainer Winzenried, a Shell spokesman based in The Hague, said over the phone in an interview. The attack occurred on a pipeline that feeds oil to Nigeria’s Bonny Light export terminal, Winzenried added. He couldn’t comment on the impact of the attack.

Explosive

Explosives were detonated by MEND fighters at the oil pipeline at Kula in Rivers state at about 10:18 p.m. local time yesterday, according to an e-mailed statement from MEND, received today.

“Efforts are being made around the clock” to fix the Shell pipelines, Ajumogobia said.

MEND has stepped up attacks on pipelines in Nigeria’s oil-rich Niger Delta in recent weeks as part of what it says is a campaign to cripple the nation’s crude exports, much of which are shipped to the U.S.

“Our candid advice to the oil majors is that they should not waste their time repairing any lines as we will continue to sabotage them,” MEND spokesman Jomo Gbomo said in the statement. “We have time on our side and there is so much to be destroyed.”

To contact the reporter on this story: Julie Ziegler in Lagos at [email protected] Mbachu in Lagos via Johannesburg at [email protected]

Last Updated: April 25, 2008 13:19 EDT