Nigeria Is Hurting The Oil Market
February 05, 2010 2:41 PM
Nigeria's oil industry is about to implode.
The coming destruction will have a disastrous effect on the global oil market... But I've got a good idea exactly how this will play out, and I'm getting my readers ready. Before we get into that, let me give you a little background.
In the last few years, civil unrest in the Niger Delta scuttled several high-profile oil projects. The most recent news came from Chevron (NYSE: CVX), which has seen its production cut by 20,000 barrels per day thanks to sabotage.
Let me put that in perspective. With oil at $75 per barrel, Nigerian bandits are costing Chevron and its partners about $1.5 million per day, more than half a billion if it lasts a year.
That's what these bandits count on. Chevron will decide it's cheaper to pay them off to stop the sabotage... for a while.
It's not just Chevron. Royal Dutch Shell dominated oil production in Nigeria for 50 years. But since 2008, bandits have destroyed 50,000 barrels per day of Shell's production. Now it's had enough. The company will put 10 onshore fields up for sale, worth between $4 billion and $5 billion.
See more on stockhouse here.
