Nigeria is no longer Africa’s largest oil producer as a result of vandalismby militants in the Niger Delta. The alarming rise in attacks on oil facilities now means Nigeria is no longer Africa’s largest oil producer, with a country like Angola taking the spot with 1,782, 000 barrels per day as against Nigeria’s 1, 722, 000.
Nigeria’s oil output slumped to over 20-year low and this is likely to impact the country’s total output for the next six months, Business Times analysis has shown.
This is because workers of Nigeria’s biggest oil companies, Shell and Chevron have been evacuated from the region and facilities have also been shut down.
Presently, no repair is going on there because the new militancy group which claimed responsibility for the vandalisations, the Niger Delta Avengers, have barred repairs, and have also threatened to deal with oil companies sited within the region.
Attacks on Nigeria’s oil facilities have risen in the last five months of 2016, following years of relative calm, after the 2009 amnesty by Goodluck Jonathan’s administration halted attacks on oil installations.
According to estimate, the outages have impacted approximately 800,000 b/d of the country’s total production capacity of 2.2 million b/d.
Production of key export grades like Qua Iboe, Forcados, Bonny Light and Escravos have all been recently affected.
Minister of oil for state and resources, Emmanuel Kachikwu said Monday the country’s oil production has declined to 1.4 million b/d from around 2.2 million b/d at the beginning of the year due to the wave of attacks on production facilities in the Niger Delta.
Kachikwu told lawmakers of the House of Representatives that the nearly 40% drop in oil
production severely affected government revenue, which made it impossible to continue to fund the subsidy on imported gasoline.
“Because of the incessant attacks and disruption of production in the Niger Delta, as I talk to you now, we are now producing about 1.4 million b/d,” Kachikwu said speaking at the House of
Representatives in Abuja. “We were at 2.2 million b/d but we have lost 800,000 barrels.”
Forcados production has been down since February this year after a sabotage on a subset export pipeline, and repairs on this pipeline are unlikely to be completed until at least July, according to traders.
Meanwhile, Bonny Light and Escravos production have been impacted in the last two weeks due to further attacks.
Nigeria’s largest and most popular crude export grade, Qua Iboe, is also on force majeure due to a technical problem on the pipeline a week ago, which means more than one-third of the country’s production has now been affected.
However, the manner in which the Nigerian military responds to this threat will ultimately be key.
Dolapo Oni, head of energy research at Ecobank, said this trend was unfortunately expected after last year’s election victory of PresidentMuhammaduBuhari against Goodluck Jonathan, who comes from this oil rich region.
“Now I do not think it is a trend that will remain for a long time. They will provoke a heavy-handed response from the government, which if not properly handled could further alienate the Niger Delta region from the center,” Oni added.
“I expect a short- to medium-term impact on output. However, I think they have succeeded in unsettling some of the oil companies and these have evacuated a lot of staff in the region,” Oni
But some analysts have remained wary that military confrontation would lead to an immediate solution. “The government has issued orders to the military to deal decisively with the militants. However, we have gone through that route before,” AdeolaAdenikinju, an oil analyst and professor at the University of Ibadan said. “My outlook is that if there is recourse to the military option, and then the risks, uncertainty and the costs of operation in the Niger Delta may continue to escalate in the short to medium term,” he said.
On whether Amnesty would solve the militancy problem, Adenikinju said, “Genuine grievances must be addressed, the pipeline communities and other stakeholders must be brought to negotiating table, there must be increasing use of technology for preventive and remedial measures,” he said. “I also feel the Amnesty conditions could be negotiated and save the country the costs of military engagement,” he said.
But other analysts said the government will have to find a right balance of military action and political maneuvering.
“If the government commences with extensive deliberations and discussions with the communities, leaders and region, followed by a careful increase of security presence in the region, they might minimize the risk of giving the militants what they want,” added Oni.