• Sunday, July 14, 2024
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Nigeria’s oil production falls first time in 7 months


Nigeria’s crude oil output fell to 1.26 million barrels per day (bpd) in March this year, the first decline in seven months, according to the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) latest oil production status report.

Data from the upstream regulatory body shows that the country’s oil production decreased by 2.9 percent from 1.3 million bpd in February. On a year-on-year basis, it increased by 2.5 percent from 1.23 million bpd.

The oil report shows that Africa’s largest oil producer’s output fell last in August 2022 from 1.08 million bpd in July to 972,394 bpd, when the country was battling oil thieves.

Oil and gas analysts have attributed the decline to a major oil pipeline explosion during the first week of March, pipeline vandalism, maintenance and shutdowns. However, some suggest that the decline could be temporary and will not threaten the country’s foreign earnings.

“The reason for the reduction in oil production may not be very clear. However, I suspect the possibility of some shutdowns around the Eastern production flank (Port-Harcourt axis), as a major pipeline linking Rumuekpe flow station got blown up as a result of activities of illegal bunkering some weeks back,” said Ndubuisi Okereke, senior lecturer in the Petroleum Engineering Department at the Federal University of Technology, Owerri.

“This axis is a major contributor to our production, hence can contribute. Also, some other lines may be going through maintenance. This is not so good for us in terms of maximising the rising oil price.”

On March 23, 2023, a Rumuekpe community in the Emuoha Local Government Area of Rivers State recorded an early morning pipeline explosion. It was gathered that the explosion happened after a crude oil pipeline in the community was tampered with by vandals.

BusinessDay reported that the explosion occurred at a crude oil tapping point last month, killing a yet-to-be-known number of people, according to Youths and Environmental Advocacy Centre (YEAC-Nigeria).

According to YEAC, the explosion happened around 2 am, Friday morning when one of the buses loaded with crude oil headed for an artisanal refinery tried to start the vehicle, YEAC-Nigeria’s Crude Oil Spill Alert System (COSAS) revealed.

The explosion and following fire left dozens, including women, dead and burnt beyond recognition, with many other vehicles and tricycles burnt to ashes at the tapping point. The tapping point is said to be on the Trans Niger Delta Pipeline (TNP) that passed through the community.

According to Okereke, there will be a serious need for security agencies and other relevant agencies to be on the alert to avoid such lapses. We cannot afford to miss the window to re-surge our economy.

“A drop by 2.9 percent should not significantly impact our returns if we as a country are pragmatic and prudent with financial management,” said Stanley Akhile, operations team Lead at Midwestern Oil and Gas Company Limited.

“The drop may be attributed to so many internal and external issues. However, the major loading lines (Forcados, Escravos, Bonny and Brass) are all available now, so there is no fear of a significant drop.”

Akhile further said that the internal factors could be related to companies carrying out regulatory or de-bottlenecking activities on their respective stations, while external factors could be due to the unavailability of local lines for injection into the major loading lines caused by bunkering actions.

In addition, Nigeria has been unable to meet its Organisation of Petroleum Exporting Countries (OPEC) quotas which have shrunk dollar proceeds from oil sales.

Last week, OPEC and its allies unexpectedly announced additional cuts to oil production of over 1.16 million barrels per day (bpd). The cut raised oil prices from $74 per barrel to $85 per barrel. But analysts say Africa’s biggest oil producer is unlikely to see any gains if its crude oil output continues to dip.

“As major trunk lines come on stream, there has been a slight increase in oil theft, and bunkering activities have resumed on a small scale. Factors such as pipeline vandalism, maintenance and shutdowns have resulted in the fall in production,” said Etulan Adu, an oil and gas production engineer.

“There are possibilities that the fall could be temporary, and with a drive from the government to increase production, I believe the issues would be addressed. Engaging stakeholders, pipeline security and ensuring asset integrity for producing fields would help boost production.”

According to Adu, there will be losses in terms of profits from the current rise in oil prices but the likelihood of a downward trend in Nigeria’s oil production is unlikely, except the current and incoming administration slacks in its efforts to fight oil theft, pipeline vandalism and corruption.