Disruptions threaten Nigeria’s oil production – EIA

A US agency, Energy Information Administration has said Nigeria was no longer Africa’s highest crude oil producer due to disruptions, which were threatening its production outputs.

In its latest report on ‘Country Analysis Brief: Nigeria, EIA said Angola had overtaken Nigeria due to unplanned production outages.

“For many years, more crude oil was produced in Nigeria than in any other country in Africa. However, unplanned production outages—or disruptions—in Nigeria have, at times, resulted in its crude oil production falling below that of Angola, the second-highest producing country in Africa. Disruptions remain a significant and persistent downside risk to Nigeria’s crude oil production,” the report said.

The EIA further explained that Angola’s production output surpassed that of Nigeria in April.

“In the third quarter of 2022, operators of the Trans Niger pipeline and the Forcados export terminal closed their facilities for repairs. The closures triggered a sharp drop in Nigeria’s crude oil output, from 1.1 million barrels per day (b/d) in the second quarter to below 1 million b/d in the third quarter. Nigeria’s production recovered by the beginning of 2023, but the oil workers’ strike disrupted production again in April 2023. Crude oil production in Nigeria fell to slightly more than 1 million b/d in April of this year, dropping below Angola’s production, which was estimated at 1.1 million b/d that month,” the report said.

Checks by The PUNCH on the Organisation of the Petroleum Exporting Countries production for April revealed that while Angola produced 1.063 million barrels per day in April, Nigeria’s output was a mere 999, 000 barrels per day.

The agency then highlighted steps already taken by the Nigerian government to make the country more attractive for oil and natural gas investment.

“On August 16, 2021, the Petroleum Industry Act was passed in Nigeria. The legislation is the culmination of a 20-year effort to overhaul the hydrocarbon industry’s legal framework, attract investor interest in upstream development, and address grievances of communities affected by oil extraction,” it further stated.

It listed changes to Nigeria’s hydrocarbons legal framework to include creating two distinct industry regulators, the Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority; restructuring the Nigerian National Petroleum Corporation (the national oil company), lowering the tax and royalty structure for crude oil production and modifying terms and conditions for upstream licensing and leasing.

It, however, added that despite the legislative changes, oil theft and sabotage to export infrastructure continued to be major concerns because the damage caused production losses and environmental pollution.

“Crude oil disruptions often force oil companies to shut down production and limit their ability to export crude oil,” EIA asserted.