LAGOS (AFP) - A pipeline carrying crude oil across the Niger delta to Nigeria`s main export terminal has burst and is on fire, the Anglo-Dutch oil giant Shell said, warning production would be cut during repairs.
The news came as world oil prices surged to record highs for the sixth trading day in succession, breaching 54 dollars on the New York market.
While repairs are underway the oil will be diverted to a narrower pipeline and production will be cut by 20,000 barrels per day for a "few days", the firm said.
The amount is a small proportion of Nigeria`s daily exports of 2.5 million barrels, but the accident underlines the ever-present threat of accidents and sabotage that plague companies working in the troubled delta region.
The 70-centimetre (28-inch) Trans-Niger pipeline carrying crude from wells in southern Nigeria to Shell`s Bonny oil export terminal was reported to be leaking on Monday, company officials said.
Shell`s Nigerian subsidiary, the Shell Production and Development Company (SPDC), said it had already taken steps to control the fire and the leak.
Nigeria is in the second day of a four-day general strike and, despite unions saying they do not plan to disrupt exports, oil traders are anxiously monitoring the country`s daily supply of around 2.5 million barrels.
"The villagers say that the fire started early yesterday, after the spill had been seen the night before," said Ledum Mitee, president of the Movement for the Survival of the Ogoni People (MOSOP).
Mitee said oil from the burst pipeline was leaking into a tidal creek and threatening a large stretch of farmland.
"On arrival at the scene on October 11, 2004, the SPDC response team was denied access by community youths. While access was being negotiated, some unknown persons set the leak point on fire," a Shell statement said.
"The team also observed that the leak and fire had spread to a nearby fishpond. Efforts are being made to put out the fire and clamp the leak."
Mitee denied that any protest had delayed work on the pipeline and accused Shell of dragging its feet over repairs.
A witness who flew over the site of the fire in a helicopter told AFP that a huge plume of smoke was visible and around an acre of the surrounding countryside was burnt. A group of people was visible at the site.
"The volume of oil leak is not yet known and there was no fatality or injury in the incident," said the Shell statement, which was signed by external affairs director Precious Omoku.
"A joint investigation team from SPDC, government representatives and regulatory authorities will determine the cause of the incident and volume involved."
The village where the fire broke out is in the traditional homeland of the Ogoni people, who have a long-standing dispute with Shell.
The firm halted oil production in Ogoniland, a minority enclave north of the oil city of Port Harcourt, in 1993 following protests and bad international publicity over the environmental damage its operations were causing.
But important pipelines still run through Ogoni territory and community leaders often accuse the oil giant of polluting and exploiting their land without being prepared to pay for community development.