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Energy

After Chevron Corporation (CVX), Shell Becomes Victim To Niger Delta Avengers

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Daily Caller looks at the recent attack of Niger Delta Avengers on the Shell facility

After an attack on Chevron Corporation’s (NYSE:CVX) facility on Friday, Royal Dutch Shell plc. (ADR) (NYSE:RDS.A) was the next company to suffer the blow. The Nigerian terrorist group calling themselves the ‘Niger Delta Avengers’ forced employees of Shell to evacuate the facilities that the company owned.

Shell was forced to evacuate around 100 of its non-essential staff members. The company was also forced to suspend operations for the time being. This would be yet another blow to a foreign company operating in the Niger Delta.

The Niger Delta Avengers feel that the government has endowed a large amount of the country’s oil producing sites to foreign companies and that more ownership of oil should be given to locals. The Avengers, following their attack on Chevron’s facility, had warned that further attacks of this sort would take place.

The spill is a great setback for not only Shell but also for Nigeria. Crude oil prices have fallen substantially from July 2014. In a high crude environment, companies are mainly betting on high production losses in order to mitigate overall losses. Shell’s facility produces up to 90,000 barrels of oil equivalent per day.  Chevron, which had shut down another facility on Friday, also produced up to 90,000 barrels of oil equivalent per day.

The falling production has also aggravated the losses in Nigeria.  According to the data compiled by Bloomberg, Nigerian production went below 1.7 million barrels of oil equivalent per day, representing a 20 year low. Nigeria, being part of the Organization of Petroleum Exporting Countries (OPEC), has suffered immensely amid a crude oil price collapse. The country’s foreign reserves are at a decade low of $27 billion; moreover, economic growth also has been minimal.

Shell has been a victim in Nigeria in the past as well. If things do not improve, major and large foreign companies would ramp up their asset sales in the company. The local companies without the expertise and technology of their foreign counterparts would not be able to operate as efficiently thus producing more problems for Nigeria.

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