News ID: 219424
Published: 0805 GMT August 06, 2018

Is Nigeria’s oil industry on the road to recovery?

Is Nigeria’s oil industry on the road to recovery?
Published by businessdayonline.com

Over the past few years, Nigeria, Africa’s top oil exporter, has been beset by a multitude of problems, notably decreased crude production and exports, oil theft and pipeline attacks, stalled economic reforms and recovery, and the threat of oil price volatility. While the Nigerian oil industry has been cautiously optimistic about overcoming these upheavals in 2018, the nation has and will continue to face several acute challenges.

In May 2018, the Nigerian petroleum industry underwent production complications as outages at key pipelines supplying Forcados and Bonny Light grade crudes were out of commission. In particular, the shutdown of the Nembe Creek Pipeline in mid-May, which transports 150,000 bpd of Bonny Light to the Forcados terminal, caused Shell Petroleum Development Company of Nigeria to declare a force majeure on Bonny Light crude exports. Although Shell has declined to comment, there is speculation this shutdown was due to sabotage. Shell lifted the force majeure on July 13th, when repairs were completed, OilPrice.com reported.

This shutdown has, in conjunction with the closure of the leaking Trans-Forcados pipeline, which transports 200,000-240,000 bpd, led to further delays and an accumulation of unsold crude. According to S&P Global Platts, these factors caused Nigeria’s oil production to drop by 150,000 bpd from 1.88 mbpd in April, dropping it to 1.73 mbpd in May and 1.72 mbpd in June.

Facing these supply concerns, oil exports are expected to decline further to 1.43 mbpd throughout July. According to Reuters, 48 cargoes of oil exports are expected to be loaded in July, compared with 60 cargoes in June. In July, 20-34 million barrels of Nigerian oil has gone unsold as traders have sought alternative supplies. Marketing Nigerian crude grades has become difficult due to the price spread between Brent and the West Texas Intermediate, which gives an advantage to WTI petroleum over Brent-priced ones.

   
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