Nigeria’s oil production drops to 1.2mbd, lowest this year

Nigeria’s economy appears to be facing challenges from different areas simultaneously as its oil production dropped to an average 1.23 million barrels per day in August, the lowest figure recorded yet in 2021.

The naira, exchanging for N550 per dollar on the parallel market and insecurity in parts of the country, especially in the North have made nonsense of economic planning and projections by government and private firms.

The 1.2mbd August production is the latest, according to the 2021 crude oil and condensate production report released by the Department of Petroleum Resources (DPR).

The data showed oil production between January and August.

The report said Nigeria’s crude fell from an average 1.36 million barrels per day in January to 1.23 million b/d in August, representing a nine per cent decline.

For month-to-month, production of crude and condensate in August fell 6.7 percent from 1.64 million b/d in July.

By implication, the development would affect the nation’s crude exports and foreign earnings.

Brent crude stood at $71 a barrel on Thursday.

Difficulties in some oil terminals were said to have caused the decline in Nigeria’s oil output.

In August, Shell Petroleum Development Company of Nigeria declared force majeure on Forcados crude oil.

Forcados pipeline, which exports an average of 240,000 barrels of crude oil daily, is one of Nigeria’s main crude oil terminals.

Force majeure refers to a clause in contracts that allows both parties to walk out of the contract when an extraordinary event or circumstance beyond the control of the parties happen.

Shell’s decision to declare a force majeure on the oil terminal is reportedly due to “the curtailment of production and suspension of export operations as a result of some sheen noticed on the water around the loading buoy” — indicating a case of an oil spill.

According to the DPR report, crude oil production at Forcados terminal dropped consecutively since June — slumped from 5.7 million barrels in July to an average of 2 million barrels in August.

With the decline in oil production, Nigeria falls below the production cap under the OPEC+ deal at 1.596 million b/d for the month under review.

Director of the DPR, Sarki Auwalu, said o Thursday that optimisation of Nigeria’s oil production processes was crucial in the nation’s economic recovery drive.

He identified five pillars to its strategy for Maximum Economic Recovery (MER) for the industry, stressing that the objective of the strategy was to maximise the expected net value of economically recoverable petroleum from Nigeria’s acreages.

He listed items in the strategy to include reserves maturation and production optimisation, exploration and resources maturation, and improved oil recovery and enhanced oil recovery (IOR/EOR) implementation in the industry.