Violence forces cut in Nigerian oil flow

Read more... Posted on Tue, Mar. 25, 2003 STAFF AND WIRE REPORTS

ChevronTexaco Corp. shut its main oil terminal and offshore oil wells in Nigeria and began evacuating employees and refugees after violent clashes between the Nigerian army and militant members of an ethnic group seeking political reforms.

An employee of a ChevronTexaco contractor was killed by a stray bullet, the company said.

ChevronTexaco said it shut down most of its daily output in Nigeria, including wells that turn out 440,000 barrels a day of crude oil and 285 million cubic feet of natural gas. Loss of its 40 percent stake in that output cut ChevronTexaco's global oil production by about 7 percent, the company said.

Fred Gorell, a spokesman for the San Ramon-based oil giant, declined to speculate on how long the shutdown would last. "We hope it's going to be resolved soon, quickly and peacefully," he said. Other ChevronTexaco affiliates in Nigeria have continued to produce about 40,000 barrels a day, he said.

Gorell, citing uncertainty as to whether next of kin had been notified, declined to identify the employee who was killed. ChevronTexaco said it had airlifted 1,600 non-employees who had sought refuge in its facilities to safety in Nigerian cities.

Shutdowns by ChevronTexaco and other oil companies, including Royal Dutch/Shell Group, owner of a Martinez refinery, reduced by about one-third daily oil production in Nigeria, the United States' fifth-largest source of petroleum imports.

The shutdowns halted the flow of more than 800,000 barrels a day of Nigerian crude into the world market, squeezing oil supplies even as war in Iraq shut off that country's 2.5 million barrels a day and Venezuela struggled to ramp up production after a recent strike. A barrel is 42 gallons.

News of the Nigerian cutoff and uncertainty about the duration of the Iraq war sent wholesale oil prices higher after a week of declines. The benchmark price of a barrel of West Texas Intermediate crude rose 6 percent late Monday, to $29.18 from $24.50, according to Dow Jones Energy Service.

Nigeria is the fourth-largest producer in the Organization of Petroleum Exporting Countries. OPEC President Abdullah bin Hamad al-Attiyah told Cable News Network the disruption is "temporary" and that OPEC members are following developments closely.

Residents of the Niger delta have repeatedly disrupted oil operations in Nigeria, Africa's largest oil producer, to put pressure on the government and demand the producers invest in their communities. Some, with the backing of human rights groups, have sued American oil companies, including Shell and ChevronTexaco, charging them with backing military repression, charges the companies have denied.

On Monday militants of the Ijaw ethnic group threatened to attack oil facilities in the western delta of the Niger River unless President Olusegun Obasanjo's government addresses their demands, Agence France-Presse reported

"We have the tank farms and oil facilities at our disposal, and we will do very funny things with them if the government does not look into the root causes of the matter," AFP quoted Kingsley Otuaro, secretary of the Federation of Niger Delta Ijaw Communities, as saying.

Ijaws want the government to re-draw electoral boundaries near the city of Warri so that members of the ethnic group can control a local government council.

"The Ijaws are sandwiched between local governments controlled by the Itsikerri and Urhobo ethnic groups," said Bobo Brown, a Shell spokesman in Port Harcourt, Nigeria. "Over time, the struggle to get the Ijaws an independent local government has not been very successful."

Obasanjo, who is seeking re-election April 19, has sent troops to the area to quell the unrest. About 10,000 people have died in religious, ethnic and political violence since 1999, when 15 years of military rule ended.

"There has been a running battle between different ethnic groups as the elections approach; they are all caught in this confusion," Brown said. "Years of military rule have left us a culture of crisis and confusion in trying to redress political disputes."

Times staff writer Rick Jurgens and Bloomberg News Service contributed to this story.