Nigeria seeks 'human shield' hostages as oil prices surge


By Dave Clark
AFP
WARRI, Nigeria
Petroleumworld.com 02 22 06

Nigerian authorities hunted for nine foreign workers being held as "human shields" by rebel fighters Tuesday as the crisis in Africa's biggest oil industry forced world oil prices up sharply.

The nine oilmen -- three Americans, a Briton, two Egyptians, two Thais and one Filipino -- were seized on Saturday by separatist guerrillas during an attack on the energy giant Shell's Forcados oil terminal.

"The issue is now a 'human shield' situation," said naval spokesman Captain Obiara Medani, alleging that the hostages were taken because the militants knew they were about to come under attack from the security forces.

"They were aware that the military was going to react to the last kidnapping and put a stop to their activities," he explained, adding that the navy had "a good idea" where the hostages were being held.

Damage to Forcados terminal and nearby pipelines, combined with fears for the safety of other workers, has forced the firm to cut production by 455,000 barrels of oil per day, 18 percent of Nigeria's total output, the firm said.

New York trading in Nigeria's sweet light crude had been suspended on Monday for a US holiday, but buyers made up for lost time Tuesday as analysts worried that crises in four of the world's major oil exporters could hit supplies.

Sweet light crude for March delivery surged up 1.25 dollars to 61.13 dollars per barrel in electronic trading.

"When Nymex opened, the market had to adjust this morning to a lower global supply of crude and the higher geopolitical risk premium," said Darius Kowalyczk, a Hong Kong-based investment strategist with CFC Seymour.

Between them Iran, Iraq, Nigeria and Venezuela represent seven-and-a-half million barrels of oil production per day. Iraq and Nigeria now face violent insurgencies, while Iran and Venezuela are in diplomatic spats with the west.

World producers are thought to have only 1.5 million barrels of spare capacity and would not be able to replace exports from any one of these four OPEC members if their oil was taken off the market.

Nigeria's President Olusegun Obasanjo, fearing that more attacks against the oil industry will force oil giants to pull out from the winding creeks of the Niger Delta, has ruled out military action to free the hostages.

"We believe that very, very soon we should be able to reach the hostage takers. We've put in place a very powerful committee," said Abel Oshevire, a spokesman for the Delta State government.

The panel will be chaired by Chief Edwin Clark, the most senior traditional ruler among the Niger Delta's 14-million-strong Ijaw tribe, and will seek to contact the Ijaw separatists who are holding the oil worker, he said.

"They're swinging into action. We're expecting some good news," he said.
Medani confirmed the military was holding off from rescue missions or reprisal attacks in order to ensure the safety of the foreign workers.

"It's political now. The military is not in charge of things, we're just maintaining surveillance," he told AFP.

The rebels, in statements to the media, have said the men will not be released, and attacks on oil facilities not stop, until Shell pays 1.5 billion dollars (1.2 billion euros) in compensation to polluted Ijaw communities.

They also demand the release of two jailed Ijaw leaders -- a separatist warlord and an ousted state governor accused of embezzling hundreds of millions of dollars -- and insist the delta region must control its own resources.

Meanwhile a Shell spokesman in Lagos confirmed the loss of 455,000 barrels of daily oil production, after the shut-down of Forcados and the evacuation of the EA offshore field, which has its own floating export terminal.

He said a "force majeure" statement already in place to warn clients that the company would be unable to honour all of its contracts to supply Nigerian crude had been extended indefinitely.

The Niger Delta, a 70,000 square kilometre (27,000 square mile) area of swamp and mangrove, usually produces 2.6 million barrels of oil per day from a network of wells and pipelines.

Nevertheless, most people in the region live in grinding poverty and resentment of both government and the oil majors is high.

AFP 02 21 06

Copyright © 2006 AFP. All rights reserved

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