A series of attacks on oil infrastructure in the Niger Delta has pushed Nigeria’s output of crude close to a 22-year low, according to Reuters data, putting intense pressure on the country’s finances.
Shell workers at Nigeria’s Bonga oilfield in the southern Niger Delta were evacuated following a militant threat, a senior labour union official said yesterday. Attacks late last week forced Chevron to shut its Okan offshore facility, taking out 35,000 barrels per day (bpd).
Shell said the unrest had not yet impacted production, but its Forcados field is still closed and under force majeure following a February subsea pipeline attack, taking out 250,000 bpd.
The violence has depressed production in Africa’s largest producer to roughly 1.69 million bpd this month, the lowest since at least June 2007, when production fell to 1.68 million bpd, according to International Energy Agency data.
A small reduction from any field would quickly send output to the next low, seen in August 1994, when it hit 1.46 million bpd, according to the IEA data.
“It’s really not a good situation,” said Eugene Lindell, senior energy analyst with JBC Energy in Vienna, Austria, noting that the global excess of crude was keeping Brent prices from moving significantly higher on the back of the outages.
“They have less production, and they’re getting less bang for their buck.”
Nigeria’s 2016 budget, signed into law just last week, assumes 2.2 million bpd of oil production at $38 a barrel. In a country analysis released late last week, the U.S. Energy Information Administration noted that pipeline sabotage and oil supply disruptions had increased in 2016, putting direct pressure on the country’s finances.
“Because Nigeria heavily depends on oil revenue, its economy is noticeably affected by changes to its oil production and/or to global crude oil prices,” the report said.
President Muhammadu Buhari has said there would be a crackdown on “vandals and saboteurs” in the Niger Delta. Analysts said the violence could scare investment away from the country.
“If it continues like this … there are companies who will probably not consider Nigeria” for upstream investments, Lindell said.
Source @ Thenation