Nation’s crude oil production to decline by 70,000bpd

Oil prices edge closer to $36 a barrel
The International Energy Administration (IEA) expected Nigeria’s oil production to decline by 70,000 barrels per day (bpd) by 2021 to 1.85 million bpd due to reduction in investment in the country’s deepwater projects and oil theft and pipeline sabotage in the Niger Delta continues unabated.

The IEA, which made this disclosure in its energy outlook released recently, stated that African crude oil exports will fall by 600,000 bpd over the next six years as production from its biggest producers slips and rising regional refinery activity absorbs more domestic output.

Besides, crude oil prices have continued to rise as Brent increased by 2.42 per cent from the $35.1 to $35.97 per barrel during early trading hour yesterday.
West Texas Intermediate (WTI) also gained $0.97 per barrel to $33.75 a barrel.
On the New York Mercantile Exchange, Nigeria’s light sweet crude futures for delivery in April traded at $34.23 a barrel, up by $0.48 a barrel.

The report said that West Africa oil producers like Nigeria and Angola may be forced to cut prices to sell barrels, with low prices, oversupply and high stocks projected to prevail until at least early-2017.

Europe is expected to remain the main demand outlet for WAF crude, but imports of African crude to Europe are set to decline by 500,000 bpd accounting for 2.2 million bpd in 2021.

According to IEA, oil price collapse was causing “particular pain” for Africa’s two largest oil producers Nigeria and Angola, as oil output is expected to slow down along with declining state revenues.

The report also said that by 2021, the Dangote refinery project in Nigeria is expected to start-up, which will process Nigerian crudes and thus reduce the volumes for export.

Africa will observe the steepest absolute decline by a major crude exporting region, with regional crude production set to decline by 400,000 bpd mainly due to fall in output in Nigeria, Algeria and Angola, it said.

The IEA also said that West African oil producers are likely to have problems marketing their crudes over the next couple of years due to the existing global glut of sweet crude, which has made this region a new “swing producer.”

Crude runs are expected to reach 300,000 bpd in 2021 with the full 500,000 bpd nameplate capacity reached in subsequent years, the report said.

IEA said that Algeria’s oil production will fall by 170,000 bpd to 990,000 bpd in 2021 as a lack of investment pushes aging oil fields into decline.

Africa’s second largest producer Angola will see its crude production fall to 1.8 million bpd in 2021, a fall of 20,000 bpd over the six-year forecast period, according to the IEA.

The IEA said that Angola’s official two million bpd target looked unachievable even before the fall in oil prices due to technical problems besetting its deep water projects.

“The country’s aging offshore oil fields need continuous support from new and costly projects to offset steep declines and since output peaked in 2008, Luanda has struggled to stem the drop,” the report added.