Niger Delta violence should subside soon: oilmin

By Alex Lawler

LONDON (Reuters) - Violence in the Niger Delta should subside once the new president takes office, Nigeria's energy minister said on Wednesday, adding he was hopeful that Royal Dutch Shell would resume Forcados oil exports in June.

"The community dialogue, the progress that Shell has made -- I am hoping that it will hold and Shell will continue restoring the damaged facilities," Edmund Daukoru told Reuters during a visit to London.

Shell, Nigeria's biggest foreign operator, is aiming to resume exports from its Forcados oilfields next month. Militant attacks have closed around 28 percent of output in Africa's biggest producer, contributing to a rally in world oil prices.

Of the recent upsurge in violence, Daukoru said: "There is some unfinished business in the Niger Delta. This is simply a signal, not the start of something that will be sustained.

"Once the new administration is sworn in and gets engaged with the problem, I think it will die down."

Nigeria's president-elect, Umaru Yar'Adua, is due to take office on May 29. There had been optimism in the run-up to the April poll, condemned by Nigerian and foreign observers as fraudulent, that it would mark the start of a recovery in Nigeria's oil industry. Instead the situation has deteriorated.

Nigerian rebels blew up three oil pipelines in the delta on Tuesday. The attack brought the amount of production shut down in Nigeria to around 844,000 bpd, almost a third of the OPEC member's capacity of 3 million bpd.

The Movement for the Emancipation of the Niger Delta (MEND) said in an e-mail it bombed the pipelines to embarrass President Olusegun Obasanjo in his last days in office and vowed to carry out more attacks.

World oil demand usually rises in the third and fourth quarters of the year. Daukoru said OPEC should be cautious for the time being when asked if he saw room for OPEC to pump more.

"Things are holding steady," he said. "If you ask me I would not rush just yet to increase production. We should not introduce new variables at this point."

The supply loss from Nigeria has helped boost oil prices to about $66 a barrel from about $50 in January. At 1445 GMT, Brent

stood at $65.37.

Daukoru said he considered $65 a barrel a reasonable price for Brent crude given the rising cost of developing oil projects and higher prices for materials such as steel.

"Taking the development costs into account, the price of steel and so on...$65 would look like a reasonable figure."