Nigeria’s crude oil output fell to 1.26 million barrels per day (bpd) in March for the first time in seven months, according to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
According to the most recent oil production status report released by the upstream oil industry regulator, the country’s oil production has decreased by 2.9 percent from 1.3 million bpd in February.
However, it increased by 2.5 percent year on year from 1.23 million bpd.
According to the oil report, Africa’s largest oil producer’s output fell from 1.08 million bpd in July to 972,394 bpd in August 2022, when the country was battling oil thieves.
Analysts blamed the drop on a major oil pipeline explosion in the first week of March, pipeline vandalism, maintenance, and shutdowns. However, some believe that the drop is only temporary and will not jeopardize 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,” senior lecturer in the Petroleum Engineering Department at the Federal University of Technology, Owerri, Ndubuisi Okereke, told BusinessDay.
“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, an early morning pipeline explosion was recorded in the Rumuekpe community of Rivers State’s Emuoha Local Government Area. According to reports, the explosion occurred after vandals tampered with a crude oil pipeline in the community.
According to the Youths and Environmental Advocacy Centre, the explosion occurred at a crude oil tapping point last month, killing an unknown number of people (YEAC-Nigeria).
According to YEAC, the explosion occurred around 2 a.m. Friday morning when one of the buses carrying crude oil bound for an artisanal refinery attempted to start the vehicle, according to YEAC-Crude Nigeria’s Oil Spill Alert System (COSAS).
The explosion and subsequent fire killed dozens of people, including women, and burned many other vehicles and tricycles to ashes at the tapping point. According to reports, the tapping point is on the Trans Niger Delta Pipeline (TNP), which runs through the community.
According to Okereke, security agencies and other relevant agencies will need to be on high alert to avoid such lapses. We cannot afford to lose the opportunity to re-energize our economy.
“A drop by 2.9 per cent 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.”
Internal factors, according to Akhile, could be related to companies performing regulatory or de-bottlenecking activities on their respective stations, while external factors could be due to the unavailability of local lines for injection into major loading lines caused by bunkering actions.
Furthermore, Nigeria has failed to meet its Organization of Petroleum Exporting Countries (OPEC) quotas, resulting in lower dollar proceeds from oil sales.
OPEC and its allies unexpectedly announced additional cuts to oil production of more than 1.16 million barrels per day last week (bpd). Oil prices rose from $74 to $85 per barrel as a result of the cut. Analysts say Africa’s largest oil producer, however, is unlikely to see any gains if crude oil output continues to fall.
“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.
