Page last updated at 21:27 GMT, Friday, 25 April 2008 22:27 UK

Oil climbs on UK pipeline fears

Grangemouth
The pipeline relies on power from the Grangemouth refinery

Oil prices rose above $119 a barrel as oil giant BP prepared to shut down a key North Sea pipeline and a strike at Exxon in Nigeria disrupted production.

BP's Forties pipeline, which provides a third of the UK's daily oil output, will close if a two-day strike by refinery workers goes ahead.

US light crude rose $3.15 to $119.21 a barrel, but later settled at $118.52. London Brent crude settled at $116.34.

Rebels in Nigeria also claimed another attack on a Royal Dutch Shell pipeline.

The Movement for the Emancipation of the Niger Delta has repeatedly tried to sabotage Shell's production in recent weeks.

A strike by workers at Exxon Mobil, Nigeria's biggest foreign oil producer, has further disrupted production in the African country. It said it had been forced to halt its output of crude oil, estimated at 200,000 barrels per day.

Oil had hit a record high of $119.90 a barrel on Tuesday.

Strike planned

In the UK, workers at the Grangemouth plant are due to take part in a two-day strike from Sunday in a row over pensions.

FORTIES OIL PIPELINE
Grangemouth
The Forties pipeline system (FPS) carries crude oil from the Forties oil fields in the North Sea
After making landfall at Cruden Bay the oil travels to the Kinneil terminal at Grangemouth
At Kinneil it is stabilised and gas processing takes place
The Kinneil terminal uses electricity and steam from the nearby Grangemouth refinery to operate

The BP-run pipeline from the Forties oil fields in the North Sea, relies on steam and electricity from the Ineos refinery at Grangemouth in central Scotland.

A BP spokesman said that closing Grangemouth would cause up to 70 platforms in the North Sea to either shut down or reduce production of oil.

BP said the pipeline would close when the provision of steam and electricity from Grangemouth runs out.

The company added that it would keep the pipeline open as long as possible, but anticipated shutting it late on Saturday, if strike action goes ahead.

Several factors have been behind the rally in oil prices.

Demand for oil from booming economies such as China and India is growing, while supplies have remained tight.

Opec, a group of oil producing countries, has shown itself disinclined to raise quotas to curb rising prices.

And supply disruptions, like those in Nigeria and the expected shutdown of the Forties pipeline, have lead to short-term spikes in prices.

A weak dollar has also made dollar-denominated assets such as oil and other commodities relatively cheap for some investors.




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