BONGA FPSO SHELL

An aerial view taken on February 5, 2008 120 kms off the coast of Nigeria, south of Lagos, shows the FPSO Bonga (Floating, Production, Storage and Offloading). Far from the Niger Delta and its separatist militants, the 305-meter long ship pumps night and day 225,000 bbls of petrol a day and 150 million cubic feet of gas. AFP PHOTO/ JACQUES LHUILLERY

LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSA) Wednesday said it has halted production from the 200,000-barrel-a-day Bonga deepwater oil field, offshore Nigeria, after a pipeline connected to a waiting tanker started leaking.

No force majeure has been declared as a result of the leak, at a field that accounts for around 10% of Nigeria’s total crude production, and traders said the shutdown should be immaterial for West African crude differentials.

“The spill at Bonga is a tiny thing for the market,” a West Africa trader said. “It is just a small operational issue. We believe the pipe will be fixed pretty soon.”

“Early indications show that less than 40,000 barrels of oil have leaked in total,” said Shell in a statement. The Anglo-Dutch major said the incident occurred Tuesday.

Production at Bonga, which lies approximately 120 kilometers off the Nigeria coast, is now in the process of being shut down, Shell said.

An export line linking the field’s floating production, storage and offloading vessel to the tanker has been identified as the likely source of the leak, the company said. It has since been closed and depressurized, halting the flow of oil.

“We are sorry this leak has happened,” said Mutiu Sunmonu, Shell Nigeria chairman. “As soon as we became aware of it, we stopped the flow of oil and mobilized our own resources, as well as industry expertise, to ensure its effects are minimized. It is important to stress that this wasn’t a well-control incident of any sort, and to make clear that no-one has been injured. Our focus now is on a speedy and effective clean-up.”

Nigeria’s Department of Petroleum Resources and the National Oil Spill Detection and Response Agency have been notified of the incident. Shell Nigeria’s Oil Spill Response Procedure and Emergency Response Team have been activated to manage the situation, with spotter planes flying overhead to ascertain the size and direction of any oil slick.

The incident is Shell’s first offshore oil spill in Nigeria, although the company’s operations onshore the West African country have been blamed for decades of pollution.

Shell, the biggest foreign oil producer in Nigeria with a presence in the country dating back to the 1930s, has long faced criticism from environmental and human rights groups concerned about the effect its onshore activities have had on the local ecosystem. Its operations in the Delta region have been beset by sabotage and theft, which the company says is the main cause of the oil pollution in the area.

-By Alexis Flynn, Dow Jones Newswires

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