Oil & Gas

Nigeria likely to lose Africa’s top oil producer status next year

by admin

July 15, 2013 | 10:30 am
  |     |     |   Start Conversation

nigeria_2107648bNigeria may be on course to losing its ranking as the biggest oil producer in Africa to Angola, as rising crude oil thefts, delay over the passage of the Petroleum Industry Bill (PIB) and other complications, are taking a heavy toll on the country’s production volume, while Angola is ramping up production with a few new field start-ups.

Angola, Africa’s second biggest oil producer, will produce 2 million barrels per day (bpd) next year, or in 2015, meeting a target it had planned to reach in 2013, according to Jose Maria Botelho de Vasconcelos, the country’s oil minister. After three consecutive years of decline, production increased by 4.5 percent in 2012 to an average of 1.73 million bpd.

“Based on the data we have, the increase in production to 2 million barrels of oil per day may take place between 2014 and 2015,” the oil minister told Bloomberg in an interview on the sidelines of a conference in the capital, Luanda, last week.

In May this year, Angola produced more oil than Nigeria, and could upstage it as early as next year, if Nigeria fails to overhaul its stagnating oil and gas industry, analysts said.

According to OPEC’s July 2013 Monthly Oil Market Report released last week, figures show that in May, Nigeria produced 1,676,000 bpd, compared to Angola’s 1,730,000. April was also close, with Angola producing 1,711,000 bpd to Nigeria’s 1,727,000 bpd.

“Angola could overtake Nigeria in the near future, if the situation in Nigeria does not improve. The reason is not necessarily because Angolan production is rising sharply, but it is due to Nigerian output falling. Angola does not have the capacity to produce more than Nigeria yet,” Amrita Sen, chief oil analyst at Energy Aspects said, reports the Financial Times.

Crude oil theft has thwarted Nigeria from coming near the 2.53 million bpd estimate in the 2013 budget and caused huge revenue losses, estimated at over $1.23 billion (N190 billion) in the first quarter. The Nigerian National Petroleum Corporation (NNPC) had last week said that it lost a total of 11.7 million barrels of crude oil to thieves who vandalised its pipelines between 2009 and 2012, amounting to N437.34 billion.

“The threat of Nigeria losing its leading position is real. However, without getting excessively sentimental about it, the focus should be on how to resolve the simmering issues behind the problem: oil theft, reluctance of foreign players to invest due to a legislative direction, that is the passage of the PIB, and the reduction of US oil exports, due to its increased internal oil supplies,” said Ademola Oshodi, project manager, Nigerian Natural Resource Charter (NNRC).

“The NNRC also believes that interest groups should work closely with stakeholders in the sector to ensure that transparency and accountability is encouraged in the industry.”

Nigeria’s oil production, which averaged 2.2m bpd last year, has declined due largely to the upsurge in crude thefts and force majeures, resulting in frequent production shutdowns and massive oil leakages. These and other hassles in the nation’s oil sector have continued to choke the sector’s huge potential to contribute to the economy.

Shell’s Nigerian subsidiary, Shell Petroleum Development Company, last Thursday shut a trunk line of the Trans Niger Pipeline following a leak, barely a week after reopening it. The 24-inch trunk line, which is part of a broader pipeline route that carries 150,000 barrels of oil a day, through the Niger Delta to the Bonny terminal, has been the target of oil thieves in recent months.

Angola’s production this year has averaged 1.751 million bpd, while reserves are now estimated at 12.777 billion barrels, which may increase as the country starts to explore pre-salt reserves in an area stretching 1,100 kilometers (684 miles) that may hold oil under a 2 kilometer-thick layer of salt, similar to that found off the coast of Brazil.

Nigeria, which earns more than 90 percent of its foreign exchange and about 80 percent of government revenue from its oil industry, seeks to overhaul the industry through the long-anticipated PIB, which is currently before the legislature. The United States’ (US) import of its crude has drastically reduced on the back of US shale oil and gas production.

The Senate joint committee has set aside July 17 and 18 for a public hearing and meeting of all stakeholders to make input into the new PIB before it is presented to the whole Senate for consideration. The bill, which seeks to overhaul the industry, is expected to be passed this year.

By: Femi Asu

Tags: , , , ,

by admin

July 15, 2013 | 10:30 am
12893  |   93   |   0  |   Start Conversation

Big Read |  

Does Conoil need a makeover?

Does Conoil need a makeover?

One of Nigeria’s oldest company, Conoil Plc is looking like a company in need of a game changer as its...

MTN Felele

Banking App