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Shell deepwater platform attacked as Nigerian separatists step up protests

June 20, 2008

Shell deepwater platform attacked as Nigerian separatists step up protests

The Bonga oil field was attacked by militants

The Bonga oil field was attacked by militants

An attack by armed separatists in speedboats has forced Royal Dutch Shell to shut down its biggest offshore oil production unit in Nigeria, removing a tenth of the Opec state’s output.

The raid on Bonga, a vast floating oil production and storage facility 120km offshore, has caught Nigeria’s foreign oil operators by surprise. The deep water installations in the Gulf of Guinea were previously thought to be beyond the reach of the militant groups that continue to harass and disrupt oil production in the swamps of the Niger Delta.

The attack, which took place before dawn yesterday, was aimed at Bonga but the militants also attacked two drilling rigs and three supply vessels in the area. The American captain of one supply vessel, under contract for Chevron, was taken hostage. The Movement for the Emancipation of the Niger Delta (Mend), claimed responsibility for the attack and threatened further violence.

The movement said yesterday that oil companies should remove their expatriate workers and avoid sending oil and gas tankers to the area if they wished to avoid violence. “The location of today’s attack was deliberately chosen to remove any notion that offshore oil exploration is far from our reach,” it said.

The militants tried but failed to get on board the Bonga facility, Shell said. “The ship is protected with electronic devices,” a spokesman added. Production was immediately stopped and the spokesman was unable to say when it would resume.

The shutdown removes 225,000 barrels per day of oil output as well as natural gas that is fed into Nigeria LNG, the country’s liquefied natural gas export joint venture – another Shell-operated project.

A prolonged shutdown of Bonga would be a significant financial loss to Nigeria, which is already failing to meet its Opec production quotas because of the frequent attacks by Mend on pipelines and pumping stations. More worrying is yesterday’s evidence that the deepwater offshore operations are no longer safe. Officials close to Snepco, the Shell venture that operates Bonga and Shell’s other offshore projects, expressed concern about the use of boats capable of travelling several hundred kilometres at speed over the ocean.

“It’s a new development. There must be somebody behind this. It is beyond the capability of the usual groups in the Delta,” one official said.

Nigeria’s navy is ill-equipped and unable to patrol the area and the attack is likely to arouse calls for greater protection for offshore oil installations. The vulnerability of deepwater oil platforms in West Africa has been discussed within Nato, whose officials have proposed seconding warships to the area but no action has yet been taken.

The Bonga project has been the flagship of Shell’s offshore Nigeria activities and cost $3.6 billion (£1.8 billion). Located far from shore and in depths of more than 1,000 metres, the project uses a floating production and storage vessel, a converted crude oil tanker that stores oil pumped from wells on the seabed, which is then transferred to other ships for export.

Being so far from shore, Shell and its Bonga partners, ExxonMobil, Total and Eni, believed until yesterday that it would be safe.Shell is only producting two thirds of its potential output from its onshore operations with 350,000 barrels per day still shut in because of threats of violence. More than 200 people have been abducted in the Delta by militant groups. In most cases, the hostages are released unharmed in exchange for cash.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article4175357.ece

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