Nigeria continues to miss the full benefits from the sharp rise in the price of oil as ruptures on critical pipelines caused by crude oil thieves in the Niger Delta has meant a failure to meet the country’s OPEC production quota.
The failure is leading to a slowing in Nigeria’s plans to ease a severe revenue and foreign exchange crunch hurting manufacturers unable to secure FX for their raw material import.
According to data, Nigeria’s output in October fell by 60,000 barrels a day to 1.44 million a day last month, just above the five-year low hit in August.
The slump in Nigeria’s oil production led to a loss of $5.1m daily or $158m for October for a country hit by a revenue and FX shortfall.
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Last week Royal Dutch Shell Plc was forced to invoke a clause suspending exports from its Bonny Oil Terminal in the country after a pipeline halt usually associated with crude theft.
At one point this year, Shell was battling to take out near 100 illegal connections by oil thieves along one of the company’s oil pipeline.
Fellow African oil producer Angola’s production also slumped by 70,000 barrels a day to 1.1 million a day, sinking back to the 14-year low reached earlier this year, according to the survey.
The country has been plagued by investment constraints resulting in declining supply from deep-water oil fields.
As a result, OPEC delivered barely half the oil-production increase it had planned for October as African members continued to struggle with output losses.
The Organization of Petroleum Exporting Countries is reviving supplies halted during the pandemic, but added only 140,000 barrels a day last month because of the difficulties faced by Angola and Nigeria, according to a Bloomberg survey.
The under-performance may increase the impatience expressed by U.S. President Joe Biden and other world leaders, who have been pressing OPEC and its allies to alleviate surging fuel prices by opening the taps.
Core members of the cartel including Saudi Arabia, Kuwait and Iraq have so far rebuffed those calls as the group prepares to meet on Thursday.
The combination of a recovery in fuel consumption after the pandemic and constrained supply has led to a global energy crunch.
It has been felt most acutely in natural gas markets, but Brent crude has have rallied 30% since late August. The price surge is squeezing consumers and adding to fears over inflation.
The latest assessment of the group’s output — based on ship-tracking data, information from officials and estimates from consultants including Rystad Energy AS and JBC Energy GmbH — may only exacerbate the sense of frustration among consuming nations.
While Middle Easter members of the cartel like Saudi Arabia, Iraq and the United Arab Emirates are all increasing supplies in line with their schedule, their counterparts in Africa are lagging behind.
Total production by the group’s 13 members was 27.58 million barrels a day, according to the survey. Overall, the cartel is curbing output by 15% more than stipulated by its production quotas.
Brent oil was trading at $85.04 a barrel Tuesday.
