The Times of Zambia (Ndola) March 26, 2003 Posted to the web March 26, 2003 Stephen Kapambwe

THE Energy Regulation Board (ERB) says it has enough fuel stocks to last for four months and has called for calm in Zambia as the war rages in Iraq.

ERB executive director Moses Zama was confident in Lusaka yesterday current stocks in Zambia as well as supplies at the Dar-es-Salaam sea port would last through out the Iraq war.

He was speaking when Energy Deputy Minister Alex Musanya visited ERB offices on a familiarisation tour.

"We expect the stocks to run for three to for months and we think we have enough oil in the country to last through out the war in Iraq," Mr Zama said.

He said because of the measures put in place, Zambia had not experienced the escalation of oil prices that had affected most countries in the world.

"In some countries, prices have risen up to 60 per cent and as much as 80 per cent in other countries. But because we are here to protect the consumer, Zambia has not experienced the hikes (in oil prices) the world has been experiencing," he said.

He blamed the riots that rocked Venezuela, the world's fifth largest oil producer last December as well as the war in Iraq for the pressure on world oil prices.

"The riots that took place in Venezuela last December in 2002 and the war in Iraq are the two things that are putting pressure on oil prices in the world. We are hoping that the Iraq war ends soon to end this pressure," he said.

He warned that Government would no longer tolerate failure by oil marketing companies to reduce fuel pump prices when the fuel price dropped on the international market.

He appealed to the ERB to give the public ample warning whenever fuel price hikes were to be effected, saying consumers get agitated when price increases took them by surprise.

He said the ERB had a duty to ensure that consumers were protected from oil marketing firms.

Mr Zama also said ERB was in the final stages of making a decision on the application by Zesco to increase electricity tariffs by 16 per cent.

BLOOMBERG Wednesday, Mar 26, 2003,Page 12

Crude conflicts

• Nigeria is the fifth-biggest oil exporter to the US.
• Shell, ChevronTexaco and Total Fina Elf SA of France have reduced output by 817,500 barrels a day, or 37 percent of Nigeria's production, last month.
• Crude oil rose, adding to its biggest gain in 15 months yesterday.Royal Dutch/Shell Group and ChevronTexaco Corp shut down more than a third of Nigeria's oil production because of clashes between soldiers and Ijaw militants, adding to investor concern about world supplies.

Shell, Europe's largest oil company, ChevronTexaco, the second-largest US oil company, and Total Fina Elf SA of France have reduced output by 817,500 barrels a day, or 37 percent of Nigeria's production, last month. Nigeria is the fifth-biggest oil exporter to the US.

The violence, sparked by demands from the Ijaw minority for greater political representation, adds to pressure on oil supplies threatened by the US-led attack on Iraq, the Middle East's third-largest producer, and reduced shipments from Venezuela after a nationwide strike.

Crude oil in London rose as much as 6.2 percent, its biggest gain since April 2002.

"We would not count Nigerian production as being a secure supply source for a while to come," said Paul Horsnell, head of energy research at JP Morgan Chase & Co.

Crude oil rose, adding to its biggest gain in 15 months yesterday, as resistance to a US-led invasion of Iraq raised concern that its oil will be kept off the market longer than expected.

Crude oil for May delivery rose as much as US$0.39, or 1.4 percent, to US$29.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Oil traded at US$29 a barrel at 12:50pm Singapore time.

Shell has evacuated workers from the southern swamps of the western Niger River delta and shut down about 320,000 barrels a day in its western division, spokesman Simon Buerk said. An additional 50,000 barrels of production was stopped in the eastern division.

On Friday, Shell declared force majeure, a legal principle that allows it to miss contractual obligations because of circumstances beyond its control, on exports from its Bonny and Forcados terminals, partly because of the unrest.

Shell Petroleum Development Co, a joint venture with Nigeria's state-run oil company, normally produces about 800,000 barrels a day of low-sulfur crude, a type of oil that is easily converted into fuels such as gasoline. The government owns 55 percent of the venture, Shell 30 percent, Total 10 percent and Eni SpA 5 percent.

ChevronTexaco has shut down daily production of 440,000 barrels, the company said in a statement. Relocating workers from the Escravos terminal and related offshore platforms also stopped daily production of 87 million cubic meters of natural gas.

Two soldiers and three Nigerian workers were killed as Total evacuated staff from oil installations Friday and Saturday, said Paul Floren, a spokesman for Europe's third-largest oil company.

Total has reduced production by 7,500 barrels a day.

Total pumped the equivalent of 174,000 barrels of oil a day in Nigeria in 2001.

Exxon Mobil Corp, the world's largest publicly traded oil company, said its Nigerian oil and gas output hasn't been affected, spokeswoman Marcia Zelinsky. All of the Irving, Texas-based company's Nigerian production is offshore, she said.

US, Iraq face-off KAYODE EKUNDAYO

WITH Bagdad under heavy attack by the United States, Nigeria’s age-long dream of raising its daily production quota to 3,000 barrels per day may be realised, amidst fear that the fuel crisis across the country may persist.

Nigeria, like other Members of the Organisation of Petroleum Exporting Countries (OPEC) had, in the last few years been lobbying the cartel for a redistribution output quota in line with its objective of attaining a daily production of 3,000 bpd and 30 billion barrels reserves by 2003.

The current attack against Iraq, the third largest crude oil producer and the disruption of supply from Kuwait coupled with Venezuela’s output suspension due to on-going industrial strike, gave a ray of hope to Nigeria that the crisis, if continued, may lead to quota increase to as much as 3,000bpd.

Although OPEC agreed last week before the commencement of the war to leave formal output of 24.5 million bpd in place despite fears that an attack on Iraq could cut off its 1.7 million bpd exports.

Kuwait had already said it may need to shut up to 700,000 bpd of production from fields near its northern boarder with Iraq, where US troops are poised to invade.

Presidential Adviser on Petroleum Matters, Rilwanu Lukman, said with the war, the cartel was ready to drop everything and either hold a meeting where they could agreed to raise production or via telephone if required.

At the cartel last meeting held in Vienna, Austria two weeks ago, Lukman said Nigeria has the capacity to sustain 2.5 million bpd in the space of a few weeks from the current 1.2 million.

“We have the potential to increase to 2.8 and 2.9 million bpd but this is not immediate. Call for quotas increase among members began last year and members are now debating what formula to use, but there was no timetable for the new divisions,” he said.

With the increase in drilling technology innovation around the world, multi-national oil firms in the country, namely Shell Petroleum Development Company (SPDC) ChevronTexaco, TotalFinaElf, Nigeria Agip Oil Company (NAOC) the current nation’s quota.

Their hindrance has been quota restriction which reduce output capacity.

For instance, SPDC, with daily production capacity of 1.3 million barrels, produces an average of 840-900,000

With the crisis in Iraq, international market is under tension as more consumer nations scramble for products to sustain their economy.

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.

1:21 PM PST Monday 

ChevronTexaco Corp. and two other multinationals said Monday they have shut oil production totaling more than 40 percent of Nigeria's 2.2 million barrel-per-day crude output in response to growing violence in the oil-rich Niger Delta, the Reuters and Dow Jones news services reported.

ChevronTexaco officials at corporate headquarters in San Ramon said the production cuts represented 7 percent of the company's worldwide oil-equivalent production.

The growing Nigerian production losses further diminished world crude supplies reduced by the war in Iraq and Venezuela's failure to fully recover from the oilworkers' strike earlier this year. They also threaten Nigeria's economy, which depends on oil income as the world's eighth-largest exporter and the United States' fifth-largest supplier.

Nigerian military officials have ordered the delta-area oil facilities evacuated and assigned Gen. Michael Ogomudia, the Army chief of staff, to the region to lead the fight to quell what has been described as Nigeria's worst outbreak of violence in 60 years, according to media reports. The fighting between members of the Ijaw and Itsekiri tribes come on the eve of next month's national elections in Africa's largest nation. The unrest also is attributed to discontent over the oil companies' concessions to local residents.

The total shut-ins reported by ChevronTexaco, Royal Dutch/Shell Group and TotalFinaElf have reached 817,500 bpd, or roughly the same amount processed daily by the East Bay's five refineries, which use 800,000 bpd when they are running at full throughput capacity. None of the East Bay refineries, including the 165,000-bpd Martinez refinery owned by Shell or ChevronTexaco's 225,000-bpd Richmond refinery, uses Nigerian crude.

ChevronTexaco said it had shut down 440,000 bpd of production. Shell, which accounts for more than half of Nigeria's production, said it has shut a total of 370,000 bpd. Shell also has declared a force majeure, warning customers it may not be able to meet March and April crude contracts. French multinational TotalFinaElf said it has shut 7,500 bpd, according to media reports.