Emmanuel Addeh in Abuja
Following the outbreak of COVID-19, which led to the shutdown of oil and gas platforms, Nigeria recorded 11 offshore oil rigs in September 2021, which were less than 50 per cent of the 23 rigs in operation during the pre-pandemic era in February 2020, according to a data from the Organisation of Petroleum Exporting Countries (OPEC).
In the oil and gas industry, the rig count is a major index for measuring activities in the upstream sector.
Nigeria’s daily crude oil output was around two million barrels before the pandemic forced operators to shut down oil and gas facilities.
Crude oil demand had also slumped drastically with prices plummeting to an all-time low.
To ensure gradual recovery of oil price, OPEC led by Saudi Arabia and non-OPEC producers, led by Russia resolved to cut oil supplies to the international market by restricting producing countries to certain quotas.
Nigeria currently produces about 1.4 million barrels per day as it continues to struggle to meet the production quota allocated to it by OPEC.
Data from OPEC’s latest Monthly Oil Market Report (MOMR) indicated that the total number of rigs stood at 11 in September as it was in August.
The figure was less than half of the country’s total oil platforms in February 2020, which stood at 23.
From around May last year, Nigeria began shutting down many of its offshore platforms as oil prices took a downward slope and the producers’ cartel embarked on production curbs to stabilise the market.
Historic rig count figures obtained by THISDAY showed that although Nigeria’s rigs experienced zero growth in September, it was however far better than in July when the count was seven and in June when it was just five.
However, the increase between July and August is reflected in the country’s production figure, signalling readiness by the Nigerian National Petroleum Corporation (NNPC) and its partners to pump more oil. Nigeria pumped an additional 155,000 bpd in September.
The country has been unable to meet its OPEC quota due to weakening infrastructure and difficulty in restarting oil facilities that were shut down due to the cuts in production assigned to the country.
In May, when Nigeria started adhering to the OPEC allocation, the country’s producing oil rigs fell from 16 to eight.
Two months later, in July, it fell further to six; it was eight in August, 10 in September, seven in October of 2021, eight in November, and seven in December.
Furthermore, in January the shutdown of the rigs continued to take its toll on the country’s production levels, as only six rigs were produced that month.
In February, it was seven, in March, it was six, while in April 2021, the total rig count was five.
Further analysis of the data showed that while the average rigs count was 13 in 2018, it was 16 in 2019 but fell to 11 in 2020, a reduction by five oil rigs.
Put side by side a country like Algeria, the north African nation has a high of 50 and low of 21, while the United Arab Emirates (UAE), for instance, has a high of 62 and a low of 40.
The breakdown showed that Nigeria utilised six, seven, and six rigs in January, February, and March 2021, respectively, against 21, 23, and 21 used in the corresponding period of 2020, when production was at about two million bpd.
Despite asking for a higher baseline, in June, July, and August, Nigeria failed to meet the existing quota assigned to it by OPEC for the months, losing 90,000 barrels per day in August alone, which when cumulated for the entire month amounted to roughly 2.8 million barrels, making the month’s production of 1.43 million bpd one of the lowest in five years.
While Saudi Arabia and Iraq were the main drivers of OPEC’s production for August, with additional production of 290,000 bpd and 200,000 bpd respectively, Nigeria which can produce two million bpd, other things being equal, slumped from its July figure of 1.520 million bpd, according to the OPEC document.
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 decreasing rig counts and highly degraded facilities due to old age and lack of investments, there have also been instances of community workers’ protests, which incessantly disrupt operations, leading to severe losses.
A document obtained by THISDAY showed that in the previous month, the NNPC and its partners lost 6.035 million barrels of crude oil to emergency shutdowns.
In its August presentation to the Federation Account Allocation Committee (FAAC), which was held between the 18th and 19th of August, the corporation recorded that there were 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.
Still, on Qua Iboe, a further 530,000 barrels were lost to shut-ins 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.
With tightening foreign exchange earnings and falling value of the naira, Nigeria needs every dollar it can get, to strengthen its local currency and meet the demand of businessmen and other users.
According to the document, total September OPEC production, according to secondary sources, stood at 27.33 million barrels per day, in contrast to 26.84 bpd, a rise of about 490,000 bpd.
In terms of world oil demand, entire Africa remained the lowest among all the continents, coming even below India, which has an estimated 4.95 million barrels per day in 2021.
While Africa’s total consumption stands at 4.25 million barrels per day in the year, America’s demand is 24.31 million bpd, Europe’s is 13 million bpd, China’s is 14.28 million bpd, other Asia countries are expected to consume 8.61 million barrels per day in 2021, while the Middle East will gulp eight million bpd this year.
