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Security Problems Cut Shell 1Q Nigeria Production 39%


APRIL 29, 2009, 7:42 A.M. ET

LONDON (Dow Jones)–Royal Dutch Shell PLC’s (RDSB.LN) output from onshore operations in Nigeria was more than 90,000 barrels equivalent per day, or 38.5%, lower in the first quarter of 2009 compared with a year ago as security problems shut down a major pipeline and gas plant, the chief financial officer Wednesday.

Two-thirds of the output loss resulted from the shutdown of the Soku gas plant for almost the whole quarter, Peter Voser said.

Shell’s share of oil and gas production from the Shell Petroleum and Development company, its joint venture with the Nigerian National Petroleum Corporation and international oil companies Total SA (TOT) and Eni SpA (E), was 144,000 boe per day in the first quarter, compared with 234,000 boe per day a year ago, a spokesman said.

Shell’s offshore oil production, which is not operated by SPDC, was 130,000 boe per day, down from 154,000 boe per day the previous year due to quota cuts by the Organization of Petroleum Exporting Countries, the spokesman said.

SPDC shut down Soku in November to remove more than a hundred illegal connections that were used to steal natural gas condensate from an export pipeline. Voser said the security situation was still too sensitive to give a timeframe for a restart.

SPDC also had to shut down the 150,000 barrel a day Trans-Niger oil pipeline and declare force majeure on some exports from the Bonny oil terminal after a fire at a manifold station earlier this month. Voser declined to comment on the pipeline’s status.

It is commonplace for attempts at oil theft to damage pipelines and cause fires in the Niger Delta.

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-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected]

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