Nigeria’s oil production is currently grappling with recurring challenges in regards to her key oil assets such as QUA IBOE, BONGA, FORCADOS, BONNY, and ESCRAVOS, despite reaching attractive heights of 2.5 million barrels per day (March 2021) and being the world’s sixth largest oil producing nation.
According to data gotten from CEIC, oil production is hovering as low as 1.64million barrels per day as at May 2021, with mitigating factors in play such as insecurity, regulatory risks also hampering the supply outlook. The country’s oil production growth will remain hindered for the year 2021 as future forecast/indicators cite teething technical and operational issues etc, which have also been worsened by the rise un spate of pipeline sabotage, said by anonymous industry sources and analysts on the 14th of June 2021.
Nigeria’s crude production has been languishing at two-thirds of its full capacity this year due to this mitigating factor. According to S&P GLOBAL PLATTS estimate a slump of Nigeria’s crude oil production to 1.79 million b/d from 2.4 million in 2019. The same organization this year also highlighted Nigeria’s capacity to produce around 2.2 million to 2.3 million b/d, in the last six months many of the country’s large oil fields especially those in oil rich Niger Delta like FORCADOS, QUA IBOE, ESCRAVOS and offshore ones like BONGA, EA, have all been pumping far below their normal capacity due to technical or maintenance issues.
It’s also pertinent to state that under the current OPEC+ deal, Nigeria has committed to keeping its crude output at 1.5 million b/d, a feat we are currently struggling to keep up with. President Mohammad Buhari while commissioning the DEEP BLUE PROJECT in Lagos admitted that country has been suffering heavily following a sharp deep in output. “We are squeezed to produce at 1.5 million b/d against a capacity to produce 2.3million b/d now the oil industry is in turmoil”, Buhari said.
However, the ripple effect on the mainstream market can be a possible scarcity and hike in prices of petroleum products (AGO, PMS and DPK) if not well checked. The fact that as a country we are producing far below our capacity, leaves a big gap on our products for exporting purposes and those for local consumption. It’s a known fact that scarcity of petroleum products acts as an incentive for the market forces to raise prices and hoarding.
