O.T. Shell’s Oil Output Falls by 64 Percent
By Alike Ejiofor, 01.31.2009
Nigeria’s largest oil producer, Shell, which until a few years ago was producing about 1 million barrels of crude oil a day from its operations in the Niger Delta, saw its output decline drastically to some 360,000 b/d in 2008.
Confirming the fall in production, a company spokesman said the Shell Petroleum Development Company’s output averaged 360,000 b/d in 2008, down from 409,000 b/d a year earlier, owing to increased militancy and disruptions to its operations in the region.
The revelation is coming on the heels of a suspension of the unilateral cease-fire declared by militants in the Niger Delta after the military Joint Task Force (JTF) raided one of their hideouts yesterday in Port Harcourt, River State.
The oil major's output in the country, particularly in the Eastern region of the Niger Delta, has been severely hampered by attacks on its facilities by local militant groups in the last year.
It is believed that the Bonny Light and Sea Eagle and Forcados crude fields alone, operated by Shell in Nigeria, can produce around 800,000 b/d between them when running at full capacity.
SPDC’s company website says together with its joint venture partners it is capable of producing some 1 million b/d from Nigeria, which accounts for some 43% of the nation’s total output.
The company's output averaged 361,000 b/d in the fourth quarter of 2008 compared with an average of 409,000 b/d a year earlier.
The peak in the fourth quarter of 2007 coincided with a respite in violence between Niger Delta militant groups and the government, which allowed Shell time to carry out necessary repairs to infrastructure and ramp up production.
This calmer period was brief and attacks on facilities resumed last year forcing the company to declare force majeure - which provides legal protection for the company not meeting its contractual obligations with customers - at several locations.
“We made good progress in increasing security in the Western Delta area (in 2008) but there were some difficulties in the Eastern area," said Rainer Winzenried, company spokesman. “We hope for a return to more normal circumstances.”
Output from Shell’s Eastern and Western operations, which concentrate on onshore and shallow water concessions, precludes the company’s deepwater oil fields such as Bonga which produces 225,000 b/d.
In a related development, new security measures that have been introduced at Nigeria's offshore oil export terminals in the Niger Delta are leading to delays in the shipment of crude oil from the country, a shipping agent and industry sources have confirmed.
The enhanced security measures have been put in place by the Department of Petroleum Resources along with security agencies in the country to thwart attacks on vessels lifting oil from the terminals.
The security measures, which restrict oil loading onto shipping vessels at the terminals to only daylight hours, were imposed at the beginning of the year amid a spike in attacks on oil services vessels.
According to news agency reports, Nigeria has one of the world's highest incidence of piracy, second only to Somalia, with 10 attacks reported so far this year.
“The loading time has doubled since you can only load during half of the day,” said a shipping agent in Nigeria, who wished not to be named.
He said the terminals affected included Brass which belongs to Agip and Okwori in the Niger Delta, one of the world's largest wetlands and the heart of Nigeria's oil and gas operations.
The new regulations mean that at some terminals, vessels being loaded are required to disconnect by 1800 hours, drift a safe distance out to sea and return the following morning.
“There are tighter security operating measures going in as we speak," one industry source said, adding that loading in daylight hours was one of the steps being taken.
“The industry as a whole is looking at enhanced security at oil installations generally and export terminals specifically in Nigeria,” he said.
Violence in the Niger Delta has cut a fifth of Nigeria's oil output in the last three years. Nigeria is currently pumping about 2 million barrels of crude a day, according to Minister of Petroleum, Rilwanu Lukman.
The unilateral cease-fire, meanwhile, declared by militants in the troubled Niger Delta broke down yesterday when the JTF raided one of their hideouts in Port Harcourt.
The Niger Delta Vigilante, which has links to the Movement for the Eman-cipation of the Niger Delta (MEND), claimed that soldiers in gunboats attacked one of its camps.
In a swift reaction to the raid by the JTF, MEND called off its cease-fire and promised to resume hostilities today, warning all oil companies and their workers to vacate the region.
“The battle lasted for almost one hour 30 minutes and we were able to sink one of the double-engine boats with all the occupants,” said the faction's spokesman, who goes under the pseudonym Tamunokuro Ebitari.
There was no independent confirmation of the fighting. A military spokesman said he was making checks but did not get back as at press time. This is the first outbreak in hostilities since the start of the New Year.
Observers say the raid yesterday by JTF may be connected to the search for the militants who on Thursday killed an 11 year-old girl who was escorting her brother, eight-year-old Samuel Awolesun to school. The boy was abducted after the girl was shot dead.
The father of the kidnapped boy was identified as Mr. Samuel Awolesun and is an employee of Shell in Port Harcourt.
The killing of the girl and kidnapping of her brother occurred around 7.30 a.m. The girl allegedly tried to resist the abduction of the boy raising an alarm, which prompted her shooting. The gunmen then forced the boy into a red Honda car and sped off.
MEND declared a unilateral cease-fire last September but has repeatedly warned that it will resume attacks if provoked by the military.
It has been holding two British oil workers hostage for more than four months partly in an effort to dissuade the security forces from attacking them.
