After Months of Improvement, Nigeria’s Oil Rig Count Declines in October

After Months of Improvement, Nigeria’s Oil Rig Count Declines in October

Emmanuel Addeh

After months of relative growth, Nigeria’s oil rig count fell from 11 in September to nine in October 2021, according to data released by the Organisation of Petroleum Exporting Countries (OPEC) in its November Monthly Oil Market Report (MOMR).

The reduction of the country’s oil assets by two is in contrast to a number of other countries that have their facilities increase markedly, including Algeria’s, which climbed by three, Congo’s which rose by one, Saudi Arabia’s which increased by seven and United Arab Emirates which added four oil rigs.

Angola’s rigs remained constant, staying at four in September and October, but overall, between 2018 and 2021, total OPEC rigs from the 13 member countries fell from 549 to 380, but rose by 13 month-on-month from 367 to 380.

But in all, world rig count, that is, the combination of OPEC and non-OPEC members’ rigs, fell from 2,357 in 2018 to 1,610 in October 2021, but with the United States taking the lead with additional 29 rigs, followed by Canada with 13 assets month-on-month.

However, the number of Nigeria’s total offshore oil rigs remained unchanged in September as the country continued to struggle to meet the production quota allocated to it by OPEC.

According to the cartel’s MOMR, the total number of rigs stood at 11 in September as it was in August, but despite that, was about half of the country’s total oil assets 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’ group embarked on production curbs to stabilise the market.
Historic rig count figures earlier 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.

The increase between July and August reflected in the country’s production figure for that period, 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 the month of May 2020 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 produced that month. In February, it was seven, in March, it was six, while in April 2021, total rig count was five.

A further analysis of the data showed that while in 2018, the average rig count was 13, 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.

In the oil industry, the rig count is a major index of measuring activities in the upstream sector, with a breakdown showing 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 2 million bpd.

Despite asking for a higher baseline, Nigeria has failed to meet the existing quota assigned to it by OPEC in the last couple of months, losing 90,000 barrels per day in the month of 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. It has since then fallen to 1.399 million bpd in September and 1.354 million bpd in October.

While Saudi Arabia and Iraq were the main drivers of OPEC’s production for August, with an additional production of 290,000 bpd and 200,000 bpd respectively, Nigeria, which has a capacity to produce 2 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, has proved 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.

The previous month, a document obtained by THISDAY showed that 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 held between the 18th and 19th of August, the corporation recorded that there were 32 of such incidents throughout its facilities in the country.

In the last few months, Nigeria has been unable to meet the quota allocated to it by OPEC, due to weakening infrastructure and difficulty in restarting oil facilities that were shut down due to the cuts in production assigned to the country.

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