Shell's Nigeria output cut by 20%

Shell has cut its Nigeria oil output by 20% after a pipeline explosion and the kidnapping of four foreign oil workers.

It is losing 226,000 barrels a day after shutting its EA platform in the southern Delta region and closing the pipeline feeding an export terminal.

Royal Dutch Shell shares fell by 0.9%, or 16p, to £18.35 in morning trading.

The disruption helped push oil prices to new three-month highs on Thursday, but prices have since fallen back, with Brent crude trading at $62.50 a barrel.

Diplomats say the hostages seized from Shell's EA platform came from the UK, the US, Honduras and Bulgaria.

Unrealistic expectations

Kidnappings and pipeline explosions are common in the Niger Delta region, where local groups complain they do not see the benefits of the area's oil wealth.

According to reports, Shell is in dispute with villages near the field where the oil workers were kidnapped.

They accuse the oil company of reneging on promises to undertake development projects.

Keith Myers, an expert in African oil and gas exploration at Chatham House, told the BBC that Shell is in a difficult position.

"At the end of the day Nigeria has 124 million people and only pumps so much oil and gas.

"The value of that oil is about 80 cents for every Nigerian, so the expectation is much higher than can ever be delivered."

Nigeria remains plagued by poverty despite being the world's eighth largest oil producer and the largest in Africa.