Wole Tokede with agency report
Nigeria’s progress in curbing militant attacks hasn’t much boosted its oil output. While that’s bad news for a country mired in its worst economic recession in 25 years, it’s making life easier for fellow Organization of Petroleum Exporting Countries (OPEC) members.
Nigeria was pumping about 1.5 million barrels a day late last month, 30 per cent below what it was hoping to achieve and only a modest recovery from an almost 30-year low of 1.4 million in August.
While peace efforts have curbed the frequency of attacks in the oil-rich Niger River delta, the Forcados export terminal, the country’s third largest, remains closed and shipments are down at many others.
If these disruptions persist they could have an unintended consequence: helping the OPEC boost oil prices.
“Bringing the Forcados loading terminal back into action is key for Nigeria’s exports,” said Charles Swabey, an oil and gas analyst at BMI Research, in an e-mail. If the government follows through on the peace process, then Nigeria could become “a drag” on OPEC’s push to rebalance the market, he said, “and will likely slow the process down.”
When OPEC and 11 other producers forged an accord in December to reduce their production to eliminate a global oversupply, conflict-prone Nigeria and Libya were exempt. So a significant production increase from either nation would make it harder for the group to fulfill its pledge to reduce output by almost 4 percent.
Amid signs that U.S. output is recovering and prices stalled in the mid $50s, the group can ill afford to have its own members diluting its historic deal. Global benchmark Brent was trading at $55.43 a barrel, up 0.7 percent, as of 11 a.m. New York time on Wednesday.
Since the start of negotiations in November with militants — most of whom call themselves the Niger Delta Avengers — Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu has repeatedly said there would be a peace dividend in terms of improved oil-production. In November, the minister was targeting output of 2.2 million barrels by the end of 2016.
In reality, many of the country’s largest export terminals are experiencing disruptions. Kachikwu predicted that Forcados, which shut down in February, would restart in June, then September, then October. There’s currently ”no update” on when the facility can resume operations, said Precious Okolobo, a Lagos-based spokesman for operator Royal Dutch Shell Plc.
Qua Iboe, the nation’s largest crude stream, is still operating at reduced capacity as permanent repairs are completed to damage on its pipeline inflicted in July, Exxon Mobil Corp. said January 31, 2017.
