In recent months, Nigeria has experienced increased Pipeline vandalism. In October 2005, a pipeline fire in the south-western Delta State of Nigeria resulted in the deaths of about 60 people. This was followed by a December attack, in which armed men in speed boats dynamited Shell’s pipeline in the Opobo Channel.

In January 2006, a pipeline attack from the Brass Creek fields to the Forcados terminal forced Shell to announce a force majeure on Forcados commitments to end-February. Additional attacks made on the pipeline and the Forcados terminal in February made it necessary for Shell to extend the force majeure beyond the end-February date.

Shell estimates that 455,000 bbl/d of its Oil production is currently shut-in because of the attacks. A February 2006 attack on the Escravos pipeline, that supplies oil to the Warri refinery, caused the refinery to shutdown. Officials are unsure of how long it will take to repair the damage. Nigeria had re-commissioned the Excravos-Warri pipeline in January 2005 after 18 months of repairing the damage caused by sabotage during the 2003 Niger Delta Crisis. In addition to pipeline vandalism, Nigeria has seen an increase in kidnappings of expatriate oil workers in the Niger Delta region.

In January 2006, four foreign employees of Royal Dutch Shell were kidnapped and then held for 19 days before being released on “humanitarian grounds”. In February 2006, nine additional oil workers were kidnapped in the Niger Delta region. The Movement for the Emancipation of the Niger Delta (MEND) is taking responsibility for the kidnappings and for blowing up a Crude Oil pipeline owned and operated by Royal Dutch Shell.

As of March 3, 2006, six of the nine hostages were released, but MEND has stipulated numerous conditions that must be met before the remaining three hostages will be released. Chief among the conditions is the release of Ijaw prisoners and the establishment of a United Nations inquiry that would assess the Niger Delta problem.

Despite the recent attacks on Shell's oil facilities, the company’s deepwater Bonga field began producing oil at the end 2005. Bonga is estimated to hold recoverable reserves of 600 million barrels of oil. At peak production, the field will produce around 225,000 bbl/d and 150 million cubic feet (MMcf) of Natural Gas. Oil from the field will be stored in a floating production, storage and offloading (FPSO) unit, with a capacity of 2.0 million barrels.

Source: Energy Information Administration