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Chevron suspends contracts after Nigeria pipeline attack

LAGOS (CGN) — US oil group Chevron has suspended export contracts on much of its Nigerian production, it said Thursday, after industry sources reported a militant attack on a key pipeline.

Chevron said the declared force majeure was effective from Tuesday through December 31.

“This is due to a breach on the main onshore pipeline carrying about 90,000 barrels daily to Escravos,” Chevron said in a statement.

Oil industry sources at the weekend said armed militants late last week attacked a pipeline operated by Chevron in Nigeria’s southern oil hub.

The pipeline carries supplies to its Escravos terminal in the Niger Delta.

The US giant which operates the pipeline jointly with Nigeria’s state oil firm, the Nigerian National Petroleum Corporation (NNPC), did not give details of the “breach”.

“Necessary efforts are ongoing with all relevant stakeholders to evaluate the impact, repair the pipeline and restore production,” Chevron said.

Chevron said the net quantity affected by the measure on the pipeline is 36,000 barrels per day.

The measure exempts a party from liability for failing to meet commitments due to circumstances beyond its control.

Later Thursday, the Nigerian military said it had foiled an attack by an armed group near the Escravos export terminal.

Brigadier Wuyep Rimtip, commander of the Joint Military Task Force (JTF), a special unit deployed in the Niger Delta, said an attack by gunmen in 10 speed boats had been repelled.

“They came in 10 speed boats, we sank two of them and the rest escaped,” he told AFP in a telephone interview from the oil hub.

Militant attacks on oil pipelines, other facilities and workers since January 2006 have cut Nigeria’s daily production by more than one quarter — falling from about 2.6 million barrels to about two million now.

According to OPEC figures, Angola has overtaken Nigeria and is now Africa’s biggest oil producer.

Falling international oil prices have added to the sense of crisis in the Nigerian industry.

No group has claimed responsibility for the latest attack. Armed militants in the Delta are demanding a greater share of oil revenues for local people and have stepped up attacks in recent months.

In June, militants blew up the Abiteye-Olero pipeline, forcing Chevron to cut around 120,000 barrels per day for nearly a month. On November 7, armed men attacked Chevron’s Robert-Kiri flow station, killing a Nigerian navy rating.

Last week, Anglo-Dutch group Royal Dutch Shell said it had contained a spill caused by sabotage on its Adibawa delivery line in the southern Bayelsa state.

Oil prices tumbled on Thursday under 50 dollars, with Brent crude striking its lowest level for three and a half years.

Brent North Sea crude for delivery in January tumbled to 48.20 dollars a barrel — last reached on May 24, 2005.

In New York, light sweet crude for delivery in December dived to 49.91 dollars a barrel — the lowest level since January 18, 2007.

Oil prices have plunged almost two-thirds since striking record highs of above 147 dollars in July as a global economic slowdown dents world energy demand.

Nigeria, a member of OPEC which pumps about 40 percent of global crude, relies on oil for about 99 percent of its export earnings and about 85 percent of government revenues, according to the World Bank.

Nigeria, Africa’s most populous nation, bases its budget on a benchmark oil price which for 2009 has been set at 45 dollars a barrel, down from 59 dollars this year.

In recent years, oil has only contributed about 20 percent of gross domestic product (GDP) due to troubles in the Niger Delta.

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