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Last Updated: Thursday, 12 January 2006, 20:03 GMT
Twin blow cuts Nigerian oil flow
Man in boat near oil pump
Much of Nigeria's oil comes from the Niger Delta
Nigeria's oil production has been cut by 10% after an explosion and the kidnapping of four foreign oil workers.

In the southern Delta region, gunmen in three boats boarded a vessel and seized the men, said a spokesman for oil giant Royal Dutch Shell.

Diplomats say the hostages come from the UK, the US, Honduras and Bulgaria, although Shell has not confirmed this.

Elsewhere in the Delta, a major pipeline that feeds an export terminal has been ruptured by militants.

Overall, production is down by some 220,000 barrels a day - almost 10% of Nigeria's average output of 2.6m barrels.

Meanwhile, the first audit of Nigeria's oil and gas industry has been published and, without finding direct evidence of fraud, it reveals "accounting weaknesses".

Discrepancies worth hundreds of millions of dollars were found between what oil companies paid in taxes and what the government said it received.

Vulnerable

Kidnappings and pipeline explosions are common in the Niger Delta region, where local groups complain they do not see the benefits of the area's oil wealth.

Shell says it is evacuating oil workers from the offshore facility where the kidnapping took place.

Ransom demands are often made in similar cases and the hostages are usually released unharmed.

Last month, a pipeline was blown up by dynamite, killing eight people in the same area.

Shell is in dispute with villages near the EA field, where the oil workers were kidnapped, reports the AP news agency.

They accuse the oil company of reneging on promises to undertake development projects.

The navy has deployed helicopters and gunboats to track down the hostage-takers, Reuters news agency reports.

EA is closer to land than other Nigerian offshore oilfields, making it more vulnerable to militant attacks, Reuters says.

Other oil workers, both foreign and Nigerian, have been seized in the area, before being released.

The pipeline was attacked in Brass Creek, leading Shell to suspend exports from the giant Forcados terminal.

Nigeria remains plagued by appalling poverty despite being the world's eighth largest oil producer and the largest in Africa.


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