Yahoo Finance Exxon's Oil Leak at Nigeria Spreads
U.S. energy behemoth ExxonMobil Corporation (XOM) announced an oil spill from its facility in the oil-rich Niger Delta. The oil leak has spread about 20 miles from its source, staining the waters used for fishing.
A week ago, ExxonMobil had announced the closure of a pipeline, off the coast of Akwa Ibom state, due to leakage. The reason of leakage was not revealed. This marks the second major oil spill near ExxonMobil facilities in the last three months and is the worst spill in the area since Exxon commenced its operations in the region.
A cleanup campaign had been organized by ExxonMobil management that had chemicals sprayed in the water and helped in dispersing the spill gradually. Management also apologized for the spill to all the affected communities.
Last year, in August, a U.N. report condemned the government and multi-national oil firms for causing oil pollution over the last 5 decades. This has adversely affected the Ogoniland region. A number of communities are attempting to prosecute the oil giants and seeking reimbursements in Western courts.
The mishap of U.S. major comes at a time when Africa’s biggest crude producer is facing numerous production problems. Recently, oil majors such as Royal Dutch Shell Plc (RDS.A) and Eni SpA (E) faced interruptions at their onshore sites as a result of oil pilfering and Nigeria's worst flooding in 50 years.
The implementation of environmental regulations is lax and armed gangs often damage pipelines to steal crude, thus making oil spills a common thing in Nigeria. The country’s leading exporter suffers severely due to the numerous production outages that caused export delays to Nigerian crude to grow longer.
ExxonMobil carries a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.
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