Oil Prices May Be A Concern As Nigerian Rebels Blow Up Shell's "Major" Pipeline

June 18, 2009 7:07 a.m. EST

Lagos, Nigeria (AHN) - Oil prices will be in the spotlight in markets today after the Movement for the Emancipation of the Niger Delta (MEND) militants claimed that they have blown up a "major" crude oil pipeline in Bayelsa state-owned by Royal Dutch Shell Plc (NYSE: RDS-B), a statement from rebels said.

The spokesmen from Royal Dutch Shell told reporters early Thursday that they are investigating the claims made by the rebels.

Nigeria is considered as Africa's top producer, but the country has suffered from the on-going conflict in the region as crude is one of its main exports.

"At about 20:30 Hrs (2030 GMT) of Wednesday, June 17, 2009, fighters from MEND in furtherance of Hurricane Piper Alpha (our campaign to cripple the entire oil and gas export of the Federal Republic of Nigeria), destroyed with high explosives a major crude oil trunk line in Bayelsa state belonging to Shell," Xinhua news agency quoted the group spokesman Jomo Gbomo as saying in a statement reaching here.

The country produced an average 2.13 million barrels per day in the year 2007 and it was listed as number 13 among biggest producer in the world.

But the recent escalation of attacks in the Niger Delta have closed more than a fifth of the region's crude oil production over the past three years, pushing it down to around 1.6 million barrels per day.

The group -- which tagged the attack "Hurricane Piper Alpha" -- had issued warning early this month to foreign oil workers in Niger Delta to leave the region to avoid an imminent attack.

"Piper Alpha veered off course to show its displeasure at the manner the government has reacted to the extra judicial killings of two brothers by the Nigerian troops that was caught on tape. This attack is dedicated to the brothers," Xinhua quoted rebels' statement as adding today.

"Shell should take a cue from Chevron and vacate the Nigeria Delta region to avoid collateral damage to their investment and death to staff, we do not intend to waste time taking hostages because Hurricanes are no respecters on anyone," it said.

The rebels from MEND group have claimed responsibility for several assaults on the security forces and on the workers from the oil companies.

Large oil companies that have refineries in the region, including Chevron Corp. (NYSE:CVX), have slowed their production due to conflict.

Shell customers have experienced disruption in oil supplies for the last four months. The oil company expects the interruption in Nigerian shipments to continue in July as well.

On Wednesday, crude oil for July delivery increased by as much as 70 cents, or 1 percent, to $71.73 a barrel on the New York Mercantile Exchange.

Oil prices have risen every time the rebels carry out an attack in Nigeria Delta region. The rates have increased by almost 60 percent so far this year on hopes that China will raise its demand.