Oil Rises on BP Plan to Shut U.K. Pipeline, Nigeria Disruptions

Bloomberg: Oil Rises on BP Plan to Shut U.K. Pipeline, Nigeria Disruptions

By Grant Smith

April 25 (Bloomberg) — Crude oil prices rose as BP Plc prepared to shut down a North Sea pipeline that carries about 40 percent of the U.K.’s oil production and violence and strikes crimped output in Nigeria.

BP said it would shut the Forties Pipeline System from tomorrow evening because of a two-day strike at a refinery in Scotland. In Nigeria, Exxon Mobil Corp.’s unit began shutting production as workers went on strike, while armed militants sabotaged a pipeline belonging to Royal Dutch Shell Plc.

“The strike in Grangemouth and the problems in Nigeria are the most bullish factors,” said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland. “The Nigerian disruptions are more bullish because there’s more uncertainty on how long they’ll last.”

Crude oil for June delivery rose as much as $1.27, or 1.1 percent, to $117.33 a barrel on the New York Mercantile Exchange. The contract traded at $116.96 a barrel at 1:18 p.m. London time.

Brent crude for June settlement rose at much as $1.54, or 1.4 percent, to $115.88 a barrel on London’s ICE Futures Europe exchange, and last traded at $115.39.

BP will start shutting down the Forties pipeline, which carries about 700,000 barrels-a-day from more than 50 North Sea oilfields, because of a two-day strike that will start April 27 at Ineos Group Holdings Plc’s Grangemouth refinery in Scotland. The pipeline relies on utilities such as steam and power provided by the refinery complex.

Pipeline Sabotage

Rebels said they sabotaged a pipeline in the southern oil region belonging to Shell’s Nigerian venture. It’s the second attack in Africa’s biggest producer this week, and follows an assault last week that halted 169,000 barrels a day.

The Movement for the Emancipation of the Niger Delta’s fighters claimed they detonated the oil pipeline at Kula in Rivers state at about 10:18 p.m. local time, according to an e- mailed statement from the group received today.

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.

That equates to 765,000 barrels a day. He expects all the company’s production to be halted by the end of the day.

To contact the reporter on this story: Christian Schmollinger in Singapore at [email protected]. Grant Smith in London at [email protected]

Last Updated: April 25, 2008 08:20 EDT

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