UPDATE 3-Disbelief as UK Buzzard oilfield shuts, again

Mon Nov 12, 2012 12:17pm EST

Related Topics

* Shutdown comes just after field returned from maintenance

* Field is largest contributor to Forties, key part of Brent

* Supply loss supports Brent, restart seen later Monday

LONDON, Nov 12 (Reuters) - Britain's Buzzard oilfield suffered another production glitch on the weekend, frustrating traders and prompting one to say on Mo nday that the frequent disruptions to the flow of crude that sets the Brent benchmark were "worse than Nigeria."

Nexen Inc, the Canadian-based operator of the 200,000 barrel a day North Sea field, said it suffered a power outage on Sunday but had returned to service on Monday.

"We're back on line right now and oil exports (are) expected later today," Nexen spokeswoman Patti Lewis said.

Buzzard is the largest of the fields that contribute to the Forties crude blend, the most important of the North Sea crudes underpinning the Brent crude benchmark. It had restarted on Nov. 3 after an extended, two-month shutdown.

"I didn't expect it to be smooth running after such a long shutdown," one trade source said.

A series of delays in the field's restart has disrupted shipments of Forties crude, leading to an increase in the premium in the price of Brent for immediate delivery. The premium widened further on Monday.

Brent prices were up 15 cents at $109.55 a barrel by late morning Eastern U.S. time.

Buzzard shut on Sept. 4 for planned maintenance that traders initially expected to take 28 days but was subsequently pushed back in October. Reuters reported at least four outages earlier in 2012 that slowed or shut down output.

The latest disruption, which may further delay shipments of Forties crude loading in November, frustrated traders in the North Sea market.

"It is literally unbelievable," said one. "It is easy to say from the sidelines, but still, this is worse than Nigeria."

Output in Nigeria, Africa's top exporter, is often disrupted and has been curbed by oil theft and flooding in recent weeks.

A loss of Buzzard output for just a few days can have a significant impact on Forties loadings since the field produces enough oil to fill a Forties cargo every three days.

Restarting North Sea installations often takes longer than expected due to problems that include bad weather and the emergence of unexpected engineering and technical issues.

Nexen has struggled with keeping the field running reliably for two years due to a series of operational problems, which contributed to severe pressure on the company's shares.

In July, Chinese state-owned CNOOC Ltd launched a $15.1 billion takeover bid for Nexen, a contentious deal that Ottawa is scrutinizing under its foreign takeover legislation, the Investment Canada Act. It will control Buzzard if the transaction proceeds.

Last week, CNOOC's chairman said he was confident that the deal would close even though the Canadian government has twice extended its review.

FILED UNDER: