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Nigerian Crude Production Suffers Technical Setback, Pipeline Vandalism – Report

Nigerian Crude Production Suffers Technical Setback, Pipeline Vandalism – Report

Nigeria’s crude oil production output has been affected by technical and operational issues as well as pipeline vandalism, according to a report by SP Global Platts.

The West African country’s crude production has only been able to produce only two-thirds of its full capacity of between 2.2 million to 2.3 million b/d of crude oil.

Crude oil production in Nigeria is estimated to be around 1.64 million b/d in 2021, according to S&P Global Platts.

Also, agreement reached with other OPEC+ members to cut production volume is also affecting Nigeria’s production performance.

Nigeria has been allowed to increase crude production quota to 1.535 million barrels per day in May, 1.554 million b/d in June, and 1.579 million b/d in July as part of the OPEC+ deal.

Analysts added that with the fiscal and security uncertainties ahead, the outlook for the country’s oil sector is likely to come under pressure despite the implementation of some reforms.

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In the last six months, many of its large oil fields especially those in the Niger Delta like Forcados, Bonny, Escravos, Brass River and Qua Iboe and some offshore fields like Bonga, Usan, EA, have been pumping much below their normal levels due to either technical or maintenance issues.

There has also been a rise in leakages at some of the country’s key pipeline networks. Some of these were because of an increase in pipeline sabotage while others are because of the country’s fragile and aging infrastructure, some of which need urgent rehabilitation work.

In April and May, there were shut-ins by some of the producers using the Nembe Creek Trunk Line to transport their production to Bonny Terminal, due to a couple of leakages on the line, according to an official from the Nigerian petroleum ministry.

“Maintenance repairs on the Trans Ramos Pipeline, leading to production shut-ins by producers using this pipeline, also affected Forcados terminal’s production,” the official said. “There was also maintenance at Bonga, as well as pipeline maintenance and repairs at Escravos, resulting in underperformance.”

Qua Iboe output took a hit in December due to an issue at its terminal, which led to a one-month halt in its crude loadings. While the EA oil field is currently undergoing maintenance work at its offshore terminal, sources added.

The country’s production growth is also threatened by fiscal stress and the lack of regulatory reforms.

The rise of kidnappings and other security threats in the oil-producing south are also expected to deter investment.

S&P Global Analytics revised down its crude supply forecast for the second half of 2021 by around 130,000 b/d to 1.8 million b/d.

Nigerian crude loadings have been “showing consistently lower volumes on recent pipeline issues,” and with “violence rising in the southeast” of the country, downside risks are growing, it said in a recent note.

About Author

Ife Ogunfuwa is an award-winning reporter who is versed in reporting business and economy, technology, gadgets reviews, telecoms, tax, and business policy review, among others. She loves telling stories behind the numbers. She has professional certifications in business and financial reporting. You can reach her via – [email protected]

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