Nigerian rebel group attacks Shell oil facility in Delta

Shell said it had shut in some production as a precautionary measure while it investigated reports of attacks on two well clusters in its Estuary Field in the western Niger Delta, which feeds into its Forcados oil export terminal. A senior industry source said the latest attack, following similar strikes against U.S. energy firm Chevron and Italy's Agip over the past month, meant virtually all oil output in the western half of the delta was shut in.

“Basically in the western Niger Delta there is no production,” the source said, asking not to be named.

The western Niger Delta accounts for roughly half of output from the world's eighth biggest oil exporter, which has an installed capacity of around 3 million barrels per day (bpd). Oil rose above US$70 a barrel on the attack.

“The Nigerian situation is the main factor in the market,” said Mike Wittner, global head of oil research at Societe Generale. “The attacks appear to be removing some oil production capacity from the market.”

The Movement for the Emancipation of the Niger Delta (MEND) said it had struck at Shell's Forcados operations at about 3:30 a.m. and that parts of the facility were on fire.

Forcados is one of Nigeria's benchmark crude oil grades but output has been interrupted by militant attacks before. Shell already had a force majeure on its Forcados shipments for the rest of June and July, freeing it from contract obligations.

Chevron said last month it had shut 100,000 bpd from the western delta while Agip declared force majeure last week on Brass River exports, also in the western delta.

Yar'Adua on Thursday offered a 60-day amnesty to gunmen to try to end unrest which has prevented Nigeria from pumping much above two thirds of its installed capacity, costing it billions of dollars a year in lost revenue.

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