February 3, 2010 / 1:34 PM / 10 years ago

Militant attacks to hit Nigerian March oil output

LONDON (Reuters) - Nigerian crude oil exports are expected to fall in March following oil pipeline attacks, traders said on Wednesday, suggesting a recent recovery in output has stalled.

An engineer conducts routine checks on oil tanks at a refinery in Wuhan, Hubei province November 27, 2008. REUTERS/Stringer

There was a period of relative calm in Nigeria’s oil producing region at the end of last year after many key militant figures accepted an amnesty offer from President Umaru Yar’Adua.

Oil companies were then able to repair damaged oil facilities and ramp up production but the programme has stalled since the president left Nigeria for medical treatment in Saudi Arabia more than two months ago, threatening future oil output.

“Clearly the militants are acting because the president is not around and they feel their grievances have been put on the back burner,” said Kissy Agyeman-Togobo, West African political analyst at IHS Global Insight.

“Oil production did recover after the amnesty but if the insurgent attacks continue we can expect it to slump again.”

For a graphic on Nigerian oil exports, click here:

here

According to preliminary loading schedules, Nigeria will load 1.79 million barrels per day (bpd) of crude oil in March, down from a revised 1.81 million bpd in February, traders said. Both months include no exports of the Forcados grade due to production disruptions.

RECOVERY HALTS

Nigerian crude output had been due to hit a six-month high of over 2 million bpd in January, which had raised expectations that Yar’Adua’s amnesty was helping production to recover.

January’s exports are now thought to have averaged 1.98 million bpd.

Royal Dutch Shell said on Sunday it had shut down three pumping stations in Nigeria’s Niger Delta after a key crude pipeline was sabotaged. Traders said this had stopped production from the Forcados stream.

Forcados output had already been significantly reduced before Sunday’s attack with exports in December 2009 estimated by traders at around 150,000 bpd, well down from production of over 400,000 bpd hit in 2005.

Forcados exports have been under force majeure on and off since 2006, mainly due to attacks on pipelines. Shell’s Nigerian venture is the operator of Forcados.

Force majeure is a legal clause which can be used if a company is unable to meet contractual deliveries due to events beyond its control.

Nigeria’s main militant group, the Movement for the Emancipation of the Niger Delta, on Saturday ended a three-month ceasefire and threatened to unleash “an all-out assault” on Nigeria’s oil and gas industry.

Exports of Nigerian Okono crude oil have also been delayed, traders said. This added to the anticipated fall in March output, although this disruption was not thought to be caused by militant involvement.

Okono is one of Nigeria’s smaller oil streams and exports usually average around 60,000 barrels per day.

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