Militants in speedboats attacked Royal Dutch Shell's main offshore facility in Nigeria on Thursday.
Below are answers to some questions about the attack and what it could mean:
WHY IS THIS ATTACK DIFFERENT?
Militant attacks on oil installations in Nigeria have mostly targeted facilities in the shallow creeks of the Niger Delta, where pipeline bombings and kidnappings of expatriate oil workers have been frequent.
Thursday's attack targeted Shell's Bonga oilfield, which lies some 120 km (75 miles) off the Nigerian coast.
Such offshore facilities have been considered safer and easier to protect and attacks of this kind have been relatively rare. International oil companies have been focusing investment offshore partly because of the perceived lower risk.
HOW ARE WORLD OIL PRICES AFFECTED?
Global oil prices are already near record highs above $130 a barrel. With the bullish sentiment already in the market, news of any supply disruption in a major oil-producing country will spark further buying.
Militant attacks and a workers' strike in late April slashed more than half of Nigeria's production, helping oil prices surge to a then-record $120 a barrel.
Nigeria's sweet crude is popular with U.S. and European oil companies because it can be easily refined into gasoline, diesel and other products. The oil is sold at a premium to benchmark U.S. and European crudes.
HOW WILL THE INDUSTRY BE AFFECTED IN THE LONG TERM?
Attacks on oil facilities in the Niger Delta have depressed Nigeria's oil output by a fifth since early 2006, but oil companies had hoped that increasing offshore production would help to make up for the shortfall.
A sustained campaign of sabotage against offshore installations could prevent those newer projects from reaching their full potential and leave Nigeria struggling to meet its OPEC quota.
The banks financing the oil industry had thought that offshore projects were a safer bet, being relatively insulated from militant attacks. The cost of financing such projects may increase if that turns out not to be the case.
WHO ARE THE REBELS?
The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the attack. It is a nebulous organisation which emerged in late 2005 and says it is fighting for local communities to gain greater control of oil resources.
Its first major attack was in December 2005. It has carried out a series of pipeline bombings and kidnappings of expatriate workers.
The group's suspected leader, Henry Okah, is currently on trial in the central Nigerian city of Jos, charged with treason and gun-running. He faces the death penalty if convicted.
WHAT CHANCE IS THERE OF PEACE?
Nigerian President Umaru Yar'Adua took office just over a year ago promising to engage the Niger Delta militants, freeing two jailed rebel leaders and drawing up plans for formal talks.
Little concrete progress towards peace has since been made.
Vice-President Goodluck Jonathan, a native of the delta, is organising a peace summit due to be held in July to address the root causes of the unrest, which politicians, local chiefs and smaller splinter militia groups are expected to attend.
The government has promised that any initiatives agreed at the summit will be implemented, but analysts question whether any new ideas will be brought to the table.
MEND and another group -- the Ijaw Youth Council -- have said they will not take part.
WHAT DOES IT MEAN FOR NIGERIA'S ECONOMY?
Unprecedented income from high oil prices has filtered down into parts of the Nigerian economy, such as the banking sector, which has seen explosive growth in recent years.
But mismanagement and corruption, which President Yar'Adua says he is fighting to stamp out, has meant swelling government coffers have enriched an elite group of businessmen and politicians while doing little to help the poor majority.
Nigeria has said it is aiming to produce 4 million barrels of crude per day by 2010, almost double current levels, but analysts and industry experts agree the target is ambitious.
With oil prices set to remain near record levels or continue to rise, the government's revenues will only take a hit if continued attacks on offshore installations curb Nigeria's ability to lift oil output in the long term.
Below are answers to some questions about the attack and what it could mean:
WHY IS THIS ATTACK DIFFERENT?
Militant attacks on oil installations in Nigeria have mostly targeted facilities in the shallow creeks of the Niger Delta, where pipeline bombings and kidnappings of expatriate oil workers have been frequent.
Thursday's attack targeted Shell's Bonga oilfield, which lies some 120 km (75 miles) off the Nigerian coast.
Such offshore facilities have been considered safer and easier to protect and attacks of this kind have been relatively rare. International oil companies have been focusing investment offshore partly because of the perceived lower risk.
HOW ARE WORLD OIL PRICES AFFECTED?
Global oil prices are already near record highs above $130 a barrel. With the bullish sentiment already in the market, news of any supply disruption in a major oil-producing country will spark further buying.
Militant attacks and a workers' strike in late April slashed more than half of Nigeria's production, helping oil prices surge to a then-record $120 a barrel.
Nigeria's sweet crude is popular with U.S. and European oil companies because it can be easily refined into gasoline, diesel and other products. The oil is sold at a premium to benchmark U.S. and European crudes.
HOW WILL THE INDUSTRY BE AFFECTED IN THE LONG TERM?
Attacks on oil facilities in the Niger Delta have depressed Nigeria's oil output by a fifth since early 2006, but oil companies had hoped that increasing offshore production would help to make up for the shortfall.
A sustained campaign of sabotage against offshore installations could prevent those newer projects from reaching their full potential and leave Nigeria struggling to meet its OPEC quota.
The banks financing the oil industry had thought that offshore projects were a safer bet, being relatively insulated from militant attacks. The cost of financing such projects may increase if that turns out not to be the case.
WHO ARE THE REBELS?
The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the attack. It is a nebulous organisation which emerged in late 2005 and says it is fighting for local communities to gain greater control of oil resources.
Its first major attack was in December 2005. It has carried out a series of pipeline bombings and kidnappings of expatriate workers.
The group's suspected leader, Henry Okah, is currently on trial in the central Nigerian city of Jos, charged with treason and gun-running. He faces the death penalty if convicted.
WHAT CHANCE IS THERE OF PEACE?
Nigerian President Umaru Yar'Adua took office just over a year ago promising to engage the Niger Delta militants, freeing two jailed rebel leaders and drawing up plans for formal talks.
Little concrete progress towards peace has since been made.
Vice-President Goodluck Jonathan, a native of the delta, is organising a peace summit due to be held in July to address the root causes of the unrest, which politicians, local chiefs and smaller splinter militia groups are expected to attend.
The government has promised that any initiatives agreed at the summit will be implemented, but analysts question whether any new ideas will be brought to the table.
MEND and another group -- the Ijaw Youth Council -- have said they will not take part.
WHAT DOES IT MEAN FOR NIGERIA'S ECONOMY?
Unprecedented income from high oil prices has filtered down into parts of the Nigerian economy, such as the banking sector, which has seen explosive growth in recent years.
But mismanagement and corruption, which President Yar'Adua says he is fighting to stamp out, has meant swelling government coffers have enriched an elite group of businessmen and politicians while doing little to help the poor majority.
Nigeria has said it is aiming to produce 4 million barrels of crude per day by 2010, almost double current levels, but analysts and industry experts agree the target is ambitious.
With oil prices set to remain near record levels or continue to rise, the government's revenues will only take a hit if continued attacks on offshore installations curb Nigeria's ability to lift oil output in the long term.
