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As OPEC discusses a six-month extension of the oil production cut agreement that it struck in November, Nigeria plans to continue ramping up its own output.
The country, which is exempt from the agreement because its market share was severely affected by militant activity in the Niger Delta, is planning to complete repair work on the Forcados pipeline and maintenance at the Bonga field by July. Following these, crude oil production should rise to 2.2 million barrels daily, from 1.27 million bpd in March. Last month’s figure was affected by maintenance at Bonga, which produces 225,000 bpd.
Nigeria’s Oil Minister Emmanuel Ibe Kachikwu told Bloomberg in an interview that he hoped the other OPEC members agreed on an extension, so international benchmark prices could remain above $50 a barrel. Nigeria will join the market rebalancing efforts as soon as it returns to the daily production rate from before the string of militant attacks that crippled its oil industry over the last two years.
It has now been three months without bombings and repairs at the Forcados terminal, which was a preferred target for the militants, are apparently proceeding as planned. Back in February, the Oil Ministry said Forcados, which processes some 250,000 bpd of the same-name crude blend, could be back online within weeks, but that turned out to be too optimistic. Forcados was last bombed by the Niger Delta Avengers in early February.
With rising crude production and improving oil revenues, Nigeria earlier this week announced it will make the first payment under a $5.1-billion debt deal with five international oil companies by the end of April.
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In exchange for the payments, the companies, including Shell, Chevron, Total, Eni, and Exxon, are supposed to increase their investments in Nigeria’s oil and gas industry. The five majors account for 80 percent of Nigeria’s oil extraction through joint ventures with the Nigerian National Petroleum Corp. The debt was incurred as a result of NNPC’s inability to hold up its end of the bargain with regard to investments to be made by the joint ventures.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.