Troubled time: Shell is disputing ownership of an offshore block with a little-known local company
Shell hit by pipe leak in Nigeria
Shell has cut oil production by a further 50,000 barrels per day in Nigeria following a pipeline leak.
The company is investigating the cause of the leak, which takes Shell's total production outage in Nigeria to 505,000 bpd after a series of militant attacks earlier this year shut down several of its facilities.
A Shell spokesman said the leak was affecting the Nembe Creek trunk line, in Bayelsa state in the Niger Delta, which carries crude to the Bonny Island export terminal.
He said the affected stretch of pipeline had been sealed off yesterday.
There was no initial information on the cause of the leak. Sabotage of pipelines is common in the Niger Delta. Often it is carried out by "bunkerers" - oil thieves who siphon crude directly from pipelines.
There have also been frequent militant attacks on oil facilities, although in this case there was no indication of any link with a campaign of sabotage that has shut down a quarter of Nigeria's output, Reuters reported.
Also today, a Shell subsidiary placed an advertisement in a London newspaper disputing ownership of a stake in a potentially rich Nigerian offshore block with a little-known local company.
The advertisement in The Times said Shell was taking legal action to assert ownership of a 40% interest in Nigerian Offshore Block OML 122.
"Peak Petroleum Industries Nigeria Limited, the operator and retainer of 60% interest in OML 122 initiated court action against Shell in February 2006, seeking declarations to the effect that Shell's interest has terminated," the notice said.
"In seeking to protect its legal rights Shell has applied to the court for leave to counter-claim."
The advertisement was signed "Management, Shell Nigeria Upstream Ventures Limited".
Shell was unavailable for immediate comment, while attempts to contact Peak were unsuccessful.
However, an industry source said that the advertisement was identical to another Shell placed in the Nigerian press last month.
The source said Peak place an advertisement of its own, in response to Shell's notice, in which it said the agreement signed in 1998 between Shell and Peak had only stated an intent to co-operate and that negotiations on a binding deal did not reach any conclusion.
According to a copy of the advertisement provided by the source, Peak said "the parties amicably parted ways" in 2000.
In a further twist, Equator Exploration, a small oil firm listed on the London Stock Exchange's junior AIM market, said it had bought a 40 % stake in OML 122 from Peak in April 2005 and was financing drilling in the block.
Spokesman Bobby Morse said Equator was unaffected by the dispute between Shell and Peak.
Equator said on 24 March that a test well indicated reserves of about 130 million barrels of oil and 900 billion standard cubic feet gas at OML 122. It said oil production could begin in 2007.
The economics of the block could be especially attractive for Shell because it lies adjacent to the Anglo-Dutch group's large Bonga project.