NIGERIA’S crude oil production has been declining steadily in the last few months owing to the force majure declared by some of the International Oil Companies (IoCs) ,industry sources told The Nation yesterday.
The situation has made the country lose its No.1 position in oil production in Africa to Libya.
One of the sources said some of the multinational oil companies are discreetly withdrawing their investment in the industry.
The withdrawal, according to the source , is caused by the energy transition currently freezing investments in the oil and gas sector.
The decline in oil production is also caused ,in part,by bunkering and vandalism of oil facilities the source said.
Consequent upon the situation,Nigeria has been unable to meet the production quota 1.631 mb/d approved for it by the Organization of Petroleum Exporting Countries (OPEC) in October.
The cartel had in September approved 1.399mb/d for Nigeria.
In October, the Organization had a total 27.45mb/d production output quota.
The source added: “You know that some of the multinationals have declared force majure. This has affected production.
A former head of British funded Facility for Oil Sector Transparency and Reform (FOSTER), Mr. Henry Adigun, blamed the situation on the huge cost of restarting a field, instability in fiscal terms and vandalism.
He said:“The challenge is that if you shut down most of the operations, restarting them is not straight forward. Our rig count was five a few months. A lot of factors affect rig count. One is price of oil in the market. When oil price is not very good and you shutdown, it takes a lot of cost to recover. If you look at the cost and it doesn’t look good on your balance sheet then you don’t recover.
“The other issue is the damage and vandalism that is going on around. The level of vandalism is very high and it is under-reported. Agip, Shell and some other companies have suffered serious damages in their areas, limiting their ability to contribute to production, this has led to shutdowns.”
Last August, for instance, sources said NNPC and its partners lost 6.035 million barrels of crude oil to emergency shutdowns. Presenting its report to the Federation Account Allocation Committee (FAAC), in August, the Corporation reported that there were 32 of such incidents throughout its facilities in the country, leading to shut-ins.
A breakdown of the losses, according to insider sources showed 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 well head pressure. Another 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 then 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 loss of 96,000 barrels, while Sea Eagle lost 750,000 barrels.
An OPEC document entitled “Crude oil and Condensate Production 2021,” shows that in July Nigeria produced 1.323 million barrels per day (mb/d) while it produced 1.238mb/d in August, 1.246mb/d in September and 1.227mb/d in October.
Following the decline, the Minister of State for Petroleum Resources, Chief Timipre Sylva directed , the Chief Operating Officer, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) (formerly Department of Petroleum ),Engr. Gbenga Komolafe , to do all within his capacity to raise output to meet the OPEC quota for Nigeria.
Last week, Komolafe paid a courtesy call on the Chief of Defense Staff, General Lucky Irabor to solicit military support to curb the menace of crude oil theft.
Irabor, according to a statement by the commission, assured Komolafe of military assistance for the battle against the vandals.
