Oil Rises in Tokyo After Militant Attacks Cut Nigerian Exports

2006-02-19 19:44 (New York)
By Will Kennedy
Feb. 20 (Bloomberg) -- Crude oil rose in Tokyo after rebel
attacks in Nigeria cut exports from Africa's largest producer by
about 20 percent and militants threatened further strikes.
Shell said yesterday it had shut down production of 455,000
barrels of oil per day following three attacks on Feb. 18,
including the seizure of nine hostages employed by a U.S.
contractor. Nigeria ships about 2 million barrels of oil a day.
``The situation in Nigeria is likely to remain volatile for
some time,'' said Dariusz Kowalczyk, senior investment
strategist at CFC Seymour Ltd. in Hong Kong. ``Prices should
rise because of disruptions in supply.''
Crude oil for July delivery rose as much as 1.4 percent to
42,650 yen a kiloliter on the Tokyo Commodity Exchange. That's
equal to $57.36 a barrel. It traded at 42,590 yen at 9:33 a.m.
in Tokyo. The contract rose 1.8 percent on Feb. 17 to 42,060 a
kiloliter. The New York Mercantile Exchange, the world's largest
energy market, is closed today.
The militant Movement for Emancipation of the Niger Delta
said it attacked Shell's Forcados export terminal, the 115,000-
barrel per day EA field and a pipeline in the Chanomi Creek area.
Shell can't say when the Forcados terminal will reopen, London-
based spokeswoman Caroline Wittgen said by telephone yesterday.
``Fresh targets will be hit shortly,'' Jomo Gbomo, a self-
described spokesman for the militants said yesterday in an e-
mailed response to questions. ``There is no shortage of things
to destroy.''

U.S. Supplier

Nigeria, which is the fifth-biggest supplier to the U.S.,
produces low-sulfur, or sweet, crude oil, prized by refiners for
the proportion of high-value gasoline it yields. Shell, based in
The Hague and the world's third-biggest oil company, produces
about half of Nigeria's output.
The Niger Delta movement has targeted Shell installations
after alleging the company allowed an airstrip it operates to be
used for a Nigerian Air Force helicopter attack on villagers in
the region. Shell said it could neither confirm nor deny the
field had been used. The Nigerian government said the
helicopters were used to disable barges engaged in oil smuggling.
``The situation in Nigeria is a major setback for the
global oil market,'' said Gal Luft, executive director at the
Institute for the Analysis of Global Security in Washington.
``This is particularly bad since Nigeria is an important source
of light, sweet crude, the most desirable of all the crudes.''

--Editor: Cottle.