Oil giants struggle to offset rising crude prices

Oil giants struggle to offset rising crude prices

Glenn McKenzie, Associated Press, Lagos, Nigeria

Leading oil exporters outside the Middle East have pledged to
boost production to offset soaring world prices - but it could be
months or years before Top 10 giants Russia, Nigeria and Mexico
really manage to open their taps.

In all three countries, building projects to clear pipeline
bottlenecks or boost production capacity are still works in
progress, or not yet out of the talking stage.

In Nigeria, at-times violent attacks on installations in the
oil-rich Niger Delta persistently limit drilling - forcing
multinational giants to abandon a few wells and pipeline stations
entirely.

Russia, Nigeria and Mexico are the world's Nos. 2, 7 and 9 oil
exporters, according to U.S. Department of Energy rankings.

"On a longer term, at least one or two years, I think things
will change - a big increase in production is possible," in those
three nations, and in other African prospects, said Pieter Louw,
a South Africa-based energy consultant.

"But in the short term, it's better to keep your little diesel
car and don't expect big changes," Louw said. "Nothing faster
than three months."

Weekend raids on Saudi oil compounds - heightening worries
about security of Saudi oil - stand to make that timeline even
more critical.

Most oil markets were closed on Monday, but one open in Tokyo
indicated traders are concerned, with crude oil futures up.

A Tokyo-based oil broker told Dow Jones Newswires on Monday
that the al-Qaida-claimed attack was expected to have an effect
on world oil markets - where prices perched at US$40 a barrel
last week.

In Qatar, Oil Minister Abdullah bin Hamad al-Attiya said on
Monday that a "factor of fear" already had pushed up prices by $8
a barrel.

Visiting Moscow before the attacks, U.S. Energy Secretary
Spencer Abraham cited the pledges of production increases from
giants Russia, Nigeria and Mexico - saying he was puzzled why the
market hadn't already responded more favorably.

That accumulation of production promises "should have a
significant impact on world energy prices," Abraham insisted.

But the pledges seem a long way from being met - at least in
ways the world would notice.

Mexico promised this month to do its part - but only by next
year, when it has finished construction projects to boost
capacity.

Even then, the immediate output would swell by only a marginal
2-4 percent.

Nigeria promised an extra 300,000 within 40 days, if the
market wanted it.

Analysts are skeptical whether Nigeria - Africa's largest oil
producer and the No. 5 source of U.S. oil imports - can go much
beyond that modest target.

A member of the Organization of Petroleum Exporting Countries
(OPEC), Nigeria already is nearly 300,000 barrels over its daily
export quote of 1.93 million barrels.

Crime and violence by ethnic militias vying for a share of
Nigeria's oil wealth mean production cannot really go much
higher, African oil industry analysts say.

Armed attacks on installations and villages in the oil delta
have cut about 7 percent of national production, in losses to
Royal Dutch/Shell and ChevronTexaco alone.

Nigeria possibly could boost production to as much as 3
million in a year's time - at the risk of aggravating its oil-
region violence, economist Bismarck Rewane said in Lagos, the
commercial capital.

In Russia, the problems are peaceful ones - pipelines, and
port facilities. Exports through the state-owned Transneft
pipeline already are running at near-maximum capacity.

President Vladimir Putin pushed for stepped-up efforts to
widen trade routes during his state of the union address last
week.

With projects far from completion, industry experts agree any
significant Russian export boost is at least three years away.