Shell shuts major oil pipeline in Nigeria

ABUJA Sun Sep 30, 2012 3:21pm EDT

ABUJA (Reuters) - Shell's (RDSa.L) Nigerian unit shut its Bonny oil pipeline and deferred 150,000 barrels per day of production on Sunday after oil thieves caused a fire, the company said.

"Shell ... has shut the 28-inch Bomu-Bonny Trunkline after discovering a fire on it early this morning," a statement from the company said.

"A burning vessel, thought to be involved in the theft of crude oil from the line, was sighted near the incident site. The line conveys crude oil to Bonny Terminal."

Shell said it was mobilizing to fight the fire and would investigate the cause and carry out repairs as soon as possible.

Bonny Light is Nigeria's benchmark crude, used to price other grades of oil, and makes up around 10 percent of the total oil exported out of Africa's biggest producer.

Nigeria was due to export around 205,000 bpd of Bonny Light in November and 229,000 bpd in October, according to provisional loading programs. The grade is gasoline-rich and is popular with U.S. refiners.

Oil theft is a major problem in the Niger Delta wetlands region in southern Nigeria, where the majority of its oil is produced. The thousands of kilometers of winding waterways and creeks are difficult to police, although there is also evidence that security officials have been complicit in theft.

Shell estimates more than 150,000 bpd of oil is being stolen by gangs who tap into pipelines and siphon off industrial quantities of oil. Some of it is refined locally, while the rest is ferried out to larger ships offshore. (Reporting by Joe Brock; Editing by Dale Hudson and Maureen Bavdek)

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