• Saturday, April 13, 2024
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BusinessDay

Petroldollar at risk as Nigeria’s oil production slumps by 100,000 bpd

Nigeria risks missing out as $100 oil beckons

Nigeria’s oil production has slumped by 104,062 barrels per day (bpd), raising concerns about the future of the country’s petrodollar income amid the lingering foreign exchange crisis in the country.

Data gleaned from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed Nigeria’s oil production including condensates declined to 1.5 million bpd in February from 1.6 million bpd in the preceding month.

NUPRC report also showed from many of Nigeria’s large oil fields especially those in the Niger Delta like Forcados, Bonny, Escravos, Brass River and Qua Iboe and some offshore fields like Akpo, Usan and Yoho all pumped below their normal levels in February

For instance, at Bonny terminal, Nigeria’s oil production including condensates declined to a combined total of 5.1 million barrels in February from 6.9 million barrels; Brass terminal declined to 752,687 barrels from 896,581 barrels in January while Qua Iboe declined to 3.7 million barrels from 4.2 million barrels.

A local oil producer told BusinessDay that during the past two months, the Bonny terminal has performed below optimal level and the only recourse for oil producers is to shut in production to avoid the kinds of losses they saw the previous year.

“I have said it time and time again that we should forget about crude oil receipts this year. Bonny terminal is still dilapidated and operators still barge till today,” Emeka Anazodo, an energy analyst with a Lagos-based research firm said.

The Bonny oil pipeline system is the largest pipeline network in the Niger Delta. It transports oil, water and associated gas from the eastern and central delta to the Bonny Oil and Gas Terminal (BOGT). The terminal, situated on Bonny Island, 48 kilometres southeast of Port Harcourt, is the biggest in Africa with a capacity to process and export 1.25 million bpd.

“For years the Delta has been plagued by kidnappers, thieves, saboteurs and collapsing infrastructure. operating there, the majors argue, is simply not worth the risk,” The Economist, a British weekly newspaper said on Monday.

Security for oil assets, many operators say, has not been treated with the seriousness it deserves, considering that oil is responsible for much of the nation’s revenue. Militants routinely kidnap oil workers, especially expatriates and sabotage of oil pipelines occurs too frequently to absolve government officials including security personnel of collusion with criminals.

“The biggest challenge affecting the oil industry in Nigeria, apart from the transactional leadership mindset and poor industry governance, is the insecurity of upstream assets and oil theft,” Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies said.

“The industry reform that took more than 20 years to fashion has not been as effective as anticipated because of the apparent flaws in the implementation process,” Mohammed noted.

Mele Kyari, group chief executive officer of the Nigerian National Petroleum Company (NNPC) Limited, said the current level of illegal connections on oil pipelines in the country is “unbelievable”.

“Some of the scale of the infractions that we see is unbelievable. We are not able to deal with it. When you remove one connection, the next day in the same location, someone will replace it,” Kyari said while addressing lawmakers on March 13.

Industry experts said the inability of existing surveillance measures to effectively monitor pipelines and deter theft are reasons fewer investments and fewer developmental projects are carried out in the Niger Delta region after years of billion-dollar investments.

“Nigeria’s oil wealth was insufficient to spark a Middle Eastern-style economic miracle in the Niger Delta back then. Now, with a population three times larger and decreasing investment, it is woefully inadequate,” Chinedu Onyeka, an energy sector expert familiar with upstream business, said.

“The gusher of oil money also fuels the corruption and unrest that has long plagued the Niger Delta region,” he added.