Violence closes key ChevronTexaco terminal

ChevronTexaco Corp. (NYSE: CVX) is closing its 340,000 barrel-per-day Escravos terminal in Nigeria near the oil city of Warri after the country's military ordered the area evacuated in the wake of escalating violence that reportedly left at least 10 soldiers and scores of civilians dead.

A ChevronTexaco contract worker was killed earlier in the week.

Impending shutdown of the Escravos terminal raised growing fears of world oil shortages even as some 1.8 million barrels-per-day of Middle Eastern production was scuttled because of the U.S.-led war on Iraq. Venezuela, the U.S.'s fourth-largest supplier and the world's fifth-largest exporter, has yet to return to full production after an oilworkers' strike earlier this year.

Saudi Arabia is the U.S.'s largest source of foreign crude, followed by Canada, Mexico, Venezuela and Nigeria. Venezuela and Nigeria are members of OPEC, whose other members are said by industry analysts to lack sufficient surplus capacity to offset production losses from those nations and the Middle East.

San Ramon-based ChevronTexaco, Nigeria's third-largest foreign-equity producer, also declared force majeure on exports from Escravos, notifying purchasers that it may not be able to deliver March and April shipments. Oil traders said as many as 14 shipments scheduled for March and April could be affected.

Royal Dutch/Shell Group, which accounts for more than half of Nigeria's 2-million-bpd production, also was likely to declare force majeure, according to international media reports and the state-owned Nigerian National Petroleum Corp.

The Escravos terminal, which serves the oil-rich Niger delta fields in southern Nigeria, ships more than 13 percent of the oil that accounts for 95 percent of export income in Africa's most populous nation. Oil exports are the foundation of Nigeria's economy. ChevronTexaco and Shell have reported losses of 266,000 bpd since escalating violence between Ijaw and Itsekiri tribal fighters resulted in the Nigerian army ordering the area evacuated. In addition to tribal animosities, both groups are seeking greater concessions from foreign oil companies against the backdrop of national elections next month in which President Olusegun Obasanjo is seeking a second term. Some observers have described the violence nationwide as the worst since the Biafran civil war of the 1960s.

The Nigerian and Venezuelan cutbacks haven't had a direct effect on the East Bay's five refineries, whose major crude sources are Alaska and California's Central Valley fields. But they have helped drive up worldwide crude prices, which have led to soaring retail prices in the United States and the Bay Area, which now has the nation's highest pump rates for gasoline and diesel.