THE WALL STREET JOURNAL: Shell Sees Nigeria Protests Cutting Oil Deliveries by 10%: “Royal Dutch/Shell Group said community protests will disrupt about 10% of the oil company's Nigerian crude-oil deliveries through February. The move is the latest setback for Shell in strife-torn Nigeria, one of its main sources of oil, and comes amid continuing worry about global petroleum supplies.” (ShellNews.net) Posted 23 Dec 04
By CHIP CUMMINS
Staff Reporter of THE WALL STREET JOURNAL
LONDON -- Royal Dutch/Shell Group said community protests will disrupt about 10% of the oil company's Nigerian crude-oil deliveries through February.
The move is the latest setback for Shell in strife-torn Nigeria, one of its main sources of oil, and comes amid continuing worry about global petroleum supplies.
Shell said Wednesday that it won't be able to meet obligations for the delivery of about 114,000 barrels a day from a loading terminal in the oil-rich Niger Delta. A spokesman said the so-called force-majeure action means buyers may face delays of some eight days for contracted oil deliveries through January, and Shell expects "some impact" on February scheduling, he said.
Community activists occupied Shell-operated facilities in two oil fields in Nigeria earlier this month, forcing the company to curtail production. The protesters left those facilities, but negotiations with Nigerian government officials continue, and production hasn't yet resumed.
Shell and its government-controlled joint-venture partner typically produce about one million barrels of oil per day in Nigeria. Shell's equity stake amounts to about a third of that output. Nigeria's total oil production stands at just over two million barrels a day.
Contract disruptions have been a regular occurrence in the Niger Delta in recent years amid protests by community groups and environmental activists and strikes by workers targeting oil production in the region. Past Nigerian disruptions -- or the threat of disruptions -- stoked global oil prices several times this year.
Shell, with large operations in Nigeria, has been especially vulnerable to the turmoil. This is the third time the Anglo-Dutch oil giant has declared force majeure in Nigeria since May 2003, according to a spokesman.
When production is hampered in one field, companies can often ramp up production elsewhere. Amid tight oil markets and soaring prices this year, however, Nigeria has been pumping flat out. That makes it unlikely that Shell will be able to make up the shortfall in other regions.
The move is also the latest disruption to global oil supplies stretched thin this year by soaring world-wide demand and the threat of stoppages in other big producing regions, from insurgency-wracked Iraq to the hurricane-whipped Gulf of Mexico.
Recently, though, the U.S. -- the world's biggest oil consumer -- has enjoyed a period of rising oil inventories, which have comforted buyers and eased prices significantly. Government data released Wednesday showed another build in stored oil, sending U.S. benchmark crude sharply downward.
Late Wednesday, crude futures at the New York Mercantile Exchange fell $1.52, or 3.3%, to $44.24 a barrel.
Write to Chip Cummins at chip.cummins@wsj.com