Nigeria is currently struggling to boost output to meet her OPEC quota levels and may have to do so until at least next year.
This is even as underinvestment and nagging maintenance problems continue to hobble output, sources at within the industry have said.
OPEC monthly report for September showed that that the nation’s output in August dropped by 85,000 bpd to 1.239 mb/d, the lowest since this year, from 1.323 mb/d in July 2021, losing roughly 2.8 million barrels in the month, making last month’s production.
Production growth in Nigeria, Africa’s highest oil producer, going by recent data, is proving a major challenge due to infrastructure challenges and technical difficulties, leading to shut-ins.
In addition to the above problems, there have also been instances of community or workers’ protests, which incessantly disrupted operations, leading to severe losses.
Available data indicates that the Nigerian National Petroleum Corporation (NNPC) and its partners lost 6.035 million barrels of crude oil to emergency shutdowns in the previous month.
In its August presentation to the Federation Account Allocation Committee (FAAC), the corporation recorded 32 such incidents throughout its facilities in the country.
A breakdown of the losses, according to the document, indicated that the highest combined shortage of 1.62 million barrels was from Qua Iboe, with 200,000 barrels due to production shut-in arising from flare management and low wellhead pressure.
Additional 530,000 barrels were lost to shut-ins on Qua Iboe following tank top concerns, 650,000 barrels as a result of production cut-back as directed by the Department of Petroleum Resources (DPR) as well as a loss of 240,000 barrels due to a gas leak on one of the assets.
This was followed by losses from the Forcados facility, which shed 200,000 barrels, 84,000 barrels, 30, 000 barrels, and 80,000 barrels respectively on different days, with reasons ranging from leak repairs, tank top issues, a fire incident, and declaration of a force majeure.
Forcados continued its shut-ins, shedding an additional 405,000 barrels of crude oil at the Uzere/Afisere/Kokori axis following a shutdown as a result of protests by community workers as well as a loss of 80, 000 barrels due to a fire incident.
In the same vein, Anyala Madu shed 105,000 barrels, Bonny suffered total shut-ins of 335,000 barrels, Ugo Ocha lost 30,000, Okono’s shutdown led to the loss of 96,000 barrels, while Sea Eagle lost 750,000 barrels.
Usan shed 585,000 barrels, Brass lost 200,000 barrels, Erha lost 230,000 barrels and Yoho lost a cumulative 280,000 barrels during the month.
Similarly, Agbami lost 630, 000 barrels during the month, Egina lost 70,000 barrels of crude, Pennington shed a total of 195, 000 barrels, while Ima posted a loss of 30,000 barrels in the month under review.
It’s unclear if the current challenges with Nigeria’s oil infrastructure will be resolved this September, but OPEC data showed that the country had already been allocated 1.614 barrels per day for the month.
Due to Nigeria’s inability to meet its quota, in addition to the challenges in Angola, OPEC produced about 10 per cent below its overall quota but kept output from its 13 members at about 27.11 million barrels a day in August.
But Iran, Venezuela, and Libya continue to be excluded from the OPEC production quota deal, which has led to steady stability in the oil market.
In April last year, OPEC and its allies were known as OPEC+ embarked on production cutbacks in a bid to rescue the global oil industry, which at some point hit the negative territory mainly due to the COVID-19 pandemic and the oil price war between Russia and Saudi Arabia.
If Nigeria, Angola, and other countries are unable to meet production due to a build-up of the technical problems resulting from years of investment constraints and market supply remains in a deficit, countries with spare production capacity, including Saudi Arabia, Iraq, and the United Arab Emirates may be called upon to make up for the shortfall.