BBC NEWS: Shell's Nigeria output cut by 20%: "Keith Myers, an expert in African oil and gas exploration at Chatham House, told the BBC that Shell is in a difficult position.": Friday 13 January 2006

Shell has cut its Nigeria oil output by 10% after a pipeline explosion and the kidnapping of four foreign oil workers.

It is losing 106,000 barrels a day after closing the pipeline to an export terminal. Earlier, a platform closure had cut another 120,000 barrels.

Royal Dutch Shell shares fell by 0.9%, or 16p, to £18.35 in morning trading.

On Friday, a barrel of benchmark light crude rose 0.6% to $64.72 in New York. Brent crude, London's main traded oil, was 0.9% higher at $63.18.

Diplomats say the hostages seized from Shell's EA platform came from the UK, the US, Honduras and Bulgaria.

Unrealistic expectations

Kidnappings and pipeline explosions are common in the Niger Delta region, where local groups complain they do not see the benefits of the area's oil wealth.

According to reports, Shell is in dispute with villages near the field where the oil workers were kidnapped.

They accuse the oil company of reneging on promises to undertake development projects.

Keith Myers, an expert in African oil and gas exploration at Chatham House, told the BBC that Shell is in a difficult position.

"At the end of the day Nigeria has 124 million people and only pumps so much oil and gas.

"The value of that oil is about 80 cents a day for every Nigerian, so the expectation is much higher than can ever be delivered."

Nigeria remains plagued by poverty despite being the world's eighth largest oil producer and the largest in Africa.


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