Against odds, Nigeria’s crude oil output hit 1.94
million barrels per day (mbpd) in January 2015, an increase of 44,000mbpd over
the previous month’s 1.9mbpd, going by the current figures released by the
Organisation of Petroleum Exporting Countries (OPEC).
OPEC’s figures are based on secondary sources and published in its monthly oil market report.
The rise is inspite of the shutting of the
Nembe Creek pipeline on
January 17, 2015 and the Trans Forcados oil pipeline, due to a leak, and fears
of political uncertainty in the country created by the forth-coming elections.
Both pipelines are responsible for producing
410,000 barrels of Nigerian crude per day.
Compared to January 2014 output of 1.903mbpd,
it is 37,000 barrels per day higher. However, current output still falls far
below Nigeria’s peak production of 2.44 mbpd achieved in 2005.
A commercial advisor in an exploration and
production firm told BusinessDay that the addition of 44,000 b/d was most
likely from two sources; improved production from offshore fields of Bonga and
resumption of production in fields that were shut earlier.
“I have no idea of any major new field that
came on-stream in January. Moreover, it’s necessary to note that most of the
major projects that were sanctioned earlier would not be suddenly stopped”, he
said.
The increase in the crude oil output by
Africa’s number one oil producer suggests that the oil and gas industry is
insulated from the various challenges confronting the country at the moment.
“I have first-hand information about Trans-
Forcados Pipeline and I can confirm that it was breached three times in January
2015. This must have impacted on production, which makes the 44,000b/d claim by
OPEC a little puzzling. It might be necessary to understand why the pipeline
breaches did not impact the production numbers,” the commercial advisor in an
E&P firm said.
The Trans Forcados Pipeline Projected
capacity for this February is 210,000 bpd, while Nembe Creek crude oil pipeline
which carries Bonny Light crude transports about 150,000 barrels per day. The
outage halted a significant part of Nigeria’s natural gas production, as gas
fields had to be shut down because the condensate they produce, alongside the
gas, is normally evacuated through Forcados.
“Forcados is a major artery. When this
pipeline is out, we lose gas production. It accounts for 40-50 percent of gas
production in the country,” said David Ige, executive director of gas and power
at the Nigerian National Petroleum Corporation (NNPC).
The challenges confronting the oil sector did
not end with the pipeline outages. The political uncertainty in the country as
a result of the forth-coming election, which is the most keenly contested since
the return of democracy in 1999, has left the running of the economy in a state
of suspended animation.
In addition, the slump in crude oil prices,
which account for about 70 percent of Nigeria’s revenue and 90 percent of its foreign exchange
earnings, led the nation’s Central Bank to devalue its currency by about 8
percent. There are indications that the apex bank is contemplating further
currency devaluation.
Standard & Poor’s Ratings Services,
recently warned that it might downgrade Nigeria’s credit rating, citing
tumbling oil prices and political unrest.
The rating agency said there is at least a 50
percent chance it would reduce Nigeria’s long-term credit rating,
already a speculative BB-. Lower prices will drag down Nigeria’s economic
growth to 5 percent this year, from 6.3 percent in 2014.However, in spite of
these challenges; Nigeria’s oil output is on the increase.
“Political uncertainty and currency fluctuations
would also barely affect production. One major issue that political uncertainty
would have affected was the renewal of the lease for some of the oil majors’
fields and the divested assets, but that has been addressed in the last few
weeks”, said the commercial advisor in an E and P firm.
FRANK UZUEGBUNAM
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