Deal to end Nigeria oil feud in the pipeline

Deal to end Nigeria oil feud in the pipeline

By Dino Mahtani

Lagos - Royal Dutch Shell is close to ending a dispute with a Nigerian community that has forced the oil giant to shut in 100 000 barrels per day (bpd) of crude for a month, a company source said on Tuesday.

Unarmed villagers from the Niger Delta village of Kula besieged three flow stations operated by Shell and United States oil company ChevronTexaco on December 5 in a dispute over jobs and development, forcing them to shut in a total of 120 000 bpd.

Leaders of the remote fishing village in the past week struck a deal with Chevron, allowing it to resume production from its 20 000 bpd Robertkiri flow station, but said they were still in negotiations with Shell over community development projects.

'There have been some proposals, and an agreement seems to be in the works'

"There have been some proposals, and an agreement seems to be in the works, but needs to be finalised," said a Shell company source, who asked not to be identified.

Kula chief Anab Sara-Igbe said that a meeting was planned for Tuesday or Wednesday with government officials in the oil city of Port Harcourt, where Kula community delegates will officially put forward their demands to Shell.

"It is up to the community to proceed with their negotiations. If the results are good then we will accept it and if not, then we will not accept," he said.

Chevron has signed a memorandum of understanding with the Kula community to develop roads and infrastructure, said Sara-Igbe, adding that the failure of Shell to do the same had delayed the resumption of output from its affected facilities.

The occupations of the Shell and Chevron flow stations briefly trapped 100 oil workers on the terminals.

Shell shut in 70 000 bpd from its Ekulama I and II flow stations and later shut in an additional 30 000 bpd from nearby terminals, including its Belema flow station, due to subsequent restrictions on movements of its repair teams.

The shutdown prompted the company to declare a force majeure on 114 000 bpd on December 22. About 70 000 bpd were related to the Kula dispute, while the remaining 44 000 bpd were due to the separate issue of recent pipeline sabotage in the Egbema area.

Repairs were already under way at Egbema, with the losses expected to last another week, said the Shell source.

Feuds between multinationals, government and communities are common in the vast wetlands of the Niger Delta, which pumps most of Nigeria's 2,3 million bpd of oil and have fed a growing trend of violent conflict, sabotage, extortion and hostage taking.

An insurgency in 2003 in the eastern delta by a warlord who said he wanted a better deal for his impoverished people forced oil workers to leave the delta and helped push crude prices to record highs above $50 (about R280) a barrel.

An industrial dispute with workers in 2003 also forced French oil multinational Total to briefly shut in 225 000 bpd for security reasons. Chevron still has 140 000 bpd from a total capacity of 440 000 still closed down after an upsurge in ethnic violence in the western delta in 2003.

© IOL