A small group of insurgents in Nigeria's oil-rich Niger Delta helped drive up oil prices around the world yesterday by announcing a strike against one of Royal Dutch Shell's two main export terminals in the West African nation.
Spurning a Nigerian government offer of amnesty, members of the Movement for the Emancipation of the Niger Delta (MEND) have continued a series of attacks on oil installations. The group and its allies have now shut down a total of about 900,000 barrels a day, according to Argus Global Markets, an industry newsletter. In an e-mail yesterday, the insurgents claimed to have set fire to Shell's Forcados terminal with a "massive explosion" and to have sunk a Nigerian military patrol boat with more than 20 soldiers on board.
News of the attack helped prop up oil prices, which rose $2.33 a barrel, or 3.4 percent, to $71.49 a barrel on the New York Mercantile Exchange yesterday.
Prices rose despite a new International Energy Agency forecast warning of sluggish increases in world crude oil supplies over the next few years, but adding that demand would be even more sluggish. The group said that supplies through 2014 would rise 1.5 million barrels a day less than previously expected, but that oil consumption would be 3 million barrels a day less than the IEA had previously forecast.
"Whether we end up facing a supply crunch again by mid-decade, or with a more comfortable buffer of supply flexibility, depends largely on the pace of economic recovery and government action on efficiency", said Nobuo Tanaka, IEA executive director.
For now, however, oil supplies are plentiful, many analysts noted. World inventories are high and demand for petroleum products is weak because of the global economic slowdown. As a result of falling oil consumption and new capacity added in Saudi Arabia and Angola, there is about 6 million barrels a day of spare oil production capacity worldwide.
But the Nigerian attacks have eaten up a little bit of that cushion and have damaged the interests of several international oil companies, including Royal Dutch Shell, Chevron and the Italian oil giant ENI.
Shell, which operates and owns 55 percent of a joint venture in the marshy Niger Delta region, has suffered a series of attacks that cut output from its Forcados terminal to 25,000 barrels a day from nearly 200,000 barrels a day earlier this year and more than 400,000 barrels a day before attacks in February 2006, according to Argus Global Markets.
The attacks have also cut into the Nigerian government's oil revenues. "With Nigeria's ever increasing budget deficits, the country cannot tolerate this decline in crude production for much longer," Sebastian Spio-Garbrah, an analyst with the Eurasia Group, said in a report on the region.
Nigerian President Umaru Yar'Adua recently offered to grant amnesty to insurgents who turned in weapons and renounced "militancy." The offer is open for 60 days.
In an e-mail response to questions yesterday, a MEND spokesman who uses the name Jomo Gbomo said: "We do not need amnesty. What we need is justice." He said that at least one leader of a loosely affiliated group had accepted. He called the person "a political thug."
In an earlier note, he had said that the Nigerian government was offering large sums of money to entice groups into accepting the amnesty offer. "Only those who are willing to sell their birthright for a bowl of porridge will accept while the rest of us will continue the struggle until justice is achieved," he wrote.
Spio-Garbrah said the amnesty would likely fail because the Nigerian government "has a historical credibility problem in the Delta." The oil-rich region has long complained that the federal government does not share enough proceeds from oil.
Shell spokespeople in the United States could not be reached for comment, but Bloomberg News quoted a Nigerian-based Shell spokesman as confirming the attacks.
from the washington post
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