Analysts at United Capital Plc see Nigeria oil production rising in 2022 as technical difficulties at oil fields get resolved
Over time, Nigeria’s crude oil production has experienced disruptions on the back of noteworthy factors such as community interference, industrial actions by oil workers, Covid-19 outbreak at terminals, among others.
A recent highlight from TotalEnergies EP Nigeria Limited, in a letter to the Niger Delta Power Holding Company Limited (NDPHC), reflected the incessant occurrence of pipeline vandalism in Nigeria, as its NOPL pipeline (a 24 inch, 50km long pipeline under construction by TotalEnergies in a joint venture with the NNPC) got caught in the crossfire.
A quick examination of the magnitude of disruptions experienced in the oil sector thus far can be seen in the numbers extracted from different previously released FAAC reports from the crude oil marketing division of the NNPC in 2021.
READ ALSO: On Pastor Kumuyi and Mrs Ibukun Awosika
The report disclosed crude oil leakages at the different terminals printed at 10.9 mbbl, and 20.3 mbbl in Q1-2021, Q2-2021 and Q3-2021, respectively, to give an aggregate of 46.0mbbl of crude oil volumes that were shut-in in the first three quarters of 2021.
These amounted to a total of N1.3 trillion cumulative loss in crude-oil production value, using $61.32/bbl, $69.08/bbl, $73.22/bbl average prices of Brent crude for Q1, Q2 and Q3-2021, at an official exchange rate of N411.95/$.
In 2022, the FG budget assumes oil production of 1.88 mbpd at a benchmark price of $62.00/b. However, given security challenges in the oil sector, as well as underinvestment, Nigeria is unlikely to reach such lofty production levels.
Nonetheless, given the low base from 2021, we expect a modest improvement in oil production in 2022, as technical difficulties at oil fields get resolved.