Exxon, Shell in Nigeria facing ‘growing threat’

CHICAGO: Exxon Mobil Corp, Royal Dutch Shell Plc and other oil companies face a growing threat to their operations in Nigeria, the fifth-biggest oil supplier to the US, as militants launch bolder attacks. Two years of escalating conflict are forcing producers to seek better protection, said Terry Hallmark, director of political risk and policy assessment at IHS Energy, a consulting company.

Exxon and Chevron Corp last month contacted a maker of floating barriers that could be used to protect offshore rigs, according to the potential supplier, Wave Dispersion Technologies Inc.

The kidnapping of four workers on January 11 from a supply boat near a Shell platform off the Nigerian coast was a more significant attack than had seen previously, according to Joseph Bennett, chief accounting officer at New Orleans-based Tidewater Inc, the vessel’s owner. The kidnappings and a pipeline blast the same day cut the country’s oil output by as much as 10%.
“Before, you’d be dealing with individual tribes or villages who were demanding some food or a well be drilled’’ for water, Bennett said. “This time it was different because they came way offshore to reach us and they were shooting up in the air and into the water.’’

Oil prices jumped to $68.35 a barrel last week in New York, $2.50 shy of the all-time high, because of threats to supplies at a time when producers have little spare capacity to make up for any shortfall.

The Nigerian violence and concern about rising tension with Iran, Opec’s second-biggest producer, over its nuclear programme boosted oil prices 6.9% last week, the biggest weekly gain in five months.

Nigerian production, key to supplying US refiners such as Philadelphia-based Sunoco Inc, has been disrupted at least 10 times since March 2003 because of bombings, kidnappings and shootings.

“The intensity of these latest attacks is something new,’’ said Joanna Spear, a researcher at George Washington University’s Elliott School of International Affairs. “The groups of armed youth appear to be better organised than in the past, and they are stepping up the pressure.’’

All four hostages communicated with Tidewater on January 19 in a phone call arranged by the kidnappers, said Stephen Dick, executive vice president of North American operations for the New Orleans-based company. In a separate e-mail, the kidnappers said they had no intention of killing the captives.

“We talked to everybody and they all talked about the bad water, bad food and a lot of mosquitoes,’’ Dick said. The hostages include the supply boat’s captain, Patrick Landry, of Houston, Texas, and fellow Tidewater employees Milko Nichev from Bulgaria and Harry Ebanks of Honduras. The fourth, Nigel Watson-Clark, works for the oilfield-services company Ecodrill, a subsidiary of UK-based Expro International Group Plc.

The militants, who call themselves the Movement for the Emancipation of the Niger Delta, or MEND, said they are planning new attacks against oil companies in the Niger River delta. The group demanded the Nigerian government release Diepreye Alamieyeseigha, the former governor of Bayelsa state, who was impeached and arrested on money laundering charges, and Mujahid Dokubo Asari, a militia leader who is in jail on treason charges. The militants also called on Shell to pay $1.5bn to the Ijaw people as compensation for environmental damage and loss of life caused by company operations in the Niger River delta.

Exxon, Shell, Chevron and other producers pumped 2.46mn bpd in December, or 2.9% of global supply. Shell, based in The Hague, is the third-largest publicly traded oil company after Exxon and BP Plc. Chevron is fourth.

“Nigeria is the riskiest country in the world for the oil companies to do work right now,’’ Hallmark at IHS said. “There’s been a perceptible tick upward in violence in the last two years. For the oil industry, it’s really a matter of trying to minimize their losses.’’

Wave Dispersion Technologies, the world’s biggest maker of floating security barriers, was contacted by Exxon Mobil during the last week of December about surrounding Nigerian platforms with barriers designed to halt boats, said Dennis Smith, the company’s president and founder. Chevron also inquired recently.
Smith said the request was turned away because the Summit, New Jersey, company’s manufacturing plant is already at full capacity to supply the US Navy, Coast Guard and Army.

Wave Dispersion makes 34-sided polyethylene polygons that can be linked in a chain to secure a port or surround an offshore installation. Exxon spokeswoman Susan Reeves declined to say whether it had contacted Wave Dispersion or discuss security measures at the company’s offshore facilities. – Bloomberg

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Blog Tags: Antiterrorism, Counterterrorism, Force Protection, Homeland Security, Maritime Security, Port Security

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