• Thursday, March 28, 2024
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Nigeria’s growing crude oil production meets plummeting exports

Nigeria’s growing crude oil production meets plummeting exports

While Nigeria’s crude oil production capacity is growing oil exports have dipped for two-straight months, BusinessDay analysis show.

The Egina’s floating, production, storage and offloading (FPSO) vessel will add 200, 000 thousand barrels a day to Nigeria’s production at full capacity and Nigeria could ramp production up to 2 million barrels per day this year but the 1.7m bpd supply cap imposed on Nigeria by OPEC will test the country’s resolve.

Crude oil exports fell for a second straight month led by dip in shipments of grades including Bonny Light, Brass and Bonga, vessel-tracking data compiled by Bloomberg show.

“This is traceable to slower economic activities in the global oil market in those months. Besides, these might be older cargoes accumulated over time” Jubril Kareem, an independent energy expert said.

Nigeria’s crude exports fell to 1.69 million barrels per day in January as against 1.77 million b/d in December. Akpo condensate flows fell to 92k b/d against 97k b/d in December. Combined crude and condensate shipments dropped to 1.78m b/d against 1.87m b/d.

In December, the Organisation of Petroleum Exporting Countries (OPEC) decided to cut 800,000 barrels, or 2.5 percent of members daily output, this meant Nigeria’s daily oil production is to drop by a minimum of 43,775 barrels, to 1.7 million barrels, effective January 2019. The drop is expected to remain in place for an initial six months period until June 2019.

Destination analysis for January crude/condensate flows shows: 41% to Europe, 21% to Asia, 8% to Africa, 5% to North America, 4% to Latin America and 19% to unidentified destinations.

It is probably the time to imagine a scenario where crude oil prices stays bearish in 2019 and Egina pumps 200k bpd, then Dangote refinery kicks off next year needing 650k bpd. If also by some twist of events deep water oil production projects such as Owowo West with some 180k b/d capacity and Bonga Southwest with 150k b/d production capacity take FID, Nigeria will need to re-calibrate its OPEC commitments.

With rising production capacity and soon bigger refining capacity, it is time for Africa’s largest crude oil producer to go big on petrochemicals. Saudi Arabia is doing so.

BusinessDay had reported how Saudi Arabia the world’s second biggest crude producer is shifting between 2m and three million barrels per day hydrocarbon production into chemicals as one way to take a leading position in the sector.

Perhaps, Nigeria can pay more attention to becoming a petrochemicals hub in West Africa. Nigeria’s petrochemical industry has been hampered by the poor state of the refineries leading to loss of billions of naira in revenue. Shipping off 445,000 barrels of crude oil a day to refineries in Europe and Asia outsources jobs and investments to these countries.

In a 2018 report, the Paris-based energy think tank said that petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then. They are also poised to consume an additional 56 billion cubic metres (bcm) of natural gas by 2030, and 83 bcm by 2050.