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Nigeria may “plunge in total distress” if it does not take urgent measures to start solving its economic and oil and gas industry woes, Thomas Dada, founder and chief executive at Nigeria’s Frontier Oil, told local media on Thursday.
Militancy in the Niger Delta has resulted in Nigeria losing substantial crude output, which, coupled with low oil prices, is severely hitting the country’s economy.
Nigerian production continued to fluctuate, and was at 2.1 million bpd at one point before dropping to 1.2 million bpd, Dada told local website The Nation. The continuous sabotages on the oil and gas infrastructure have led to dwindling revenue, poor gas supply to the thermal plants, and low capacity utilization, among others, the manager said.
The gloomy economic outlook has forced many firms to either relocate to neighboring countries or to wind down operations. The government and private companies need to sit down and draft measures to prop up the oil and gas sector and the economy, Dada noted.
According to The Nation, sabotages by militants in the Niger Delta stripped Nigeria of 23.1 million barrels of oil in 21 days, between August 16 and September 5. Oil Minister Emmanuel Ibe Kachikwu has said that Nigeria needed to pump additional 1.1 million bpd from now until the end of the year in order to recover the lost production and achieve its annual target output.
At the end of August, the Niger Delta Avengers (NDA) said they halted hostilities against oil facilities. Just a day later, a new militant group said that it had attacked a pipeline operated by the state-run Nigerian Petroleum Development Company (NPDC). The NDA’s previous conditional ceasefire opened up a glimmer of hope for the country.
Observers, however, were skeptical about the success of a ceasefire. The NDA is just one of the militant groups operating in the Niger Delta, and a ceasefire with only the NDA does not guarantee a complete cessation of attacks.
Earlier this week, Shell lifted its force majeure on Bonny Light crude exports, while the Nigerian Army said they had arrested alleged NDA kingpin Isaac Romeo.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.