Pipeline Vandalism: A Hiccup in Nigeria's Oil Sector Progress

Oil & Gas
1049 VIEWS
Proshare - Facebook Proshare - Twitter Proshare - Linked In Proshare - WhatsApp
Proshare

Wednesday, January 12, 2022 / 09:12 AM / by United Capital Research / Header Image Credit: Sahel Standard


Proshare Nigeria Pvt. Ltd.


Over time, Nigeria's crude oil production has experienced disruptions on the back of noteworthy factors such as community interference, industrial actions by oil workers, Covid-19 outbreak at terminals, among others. A recent highlight from TotalEnergies EP Nigeria Limited, in a letter to the Niger Delta Power Holding Company Limited (NDPHC), reflected the incessant occurrence of pipeline vandalism in Nigeria, as its NOPL pipeline (a 24 inch, 50km long pipeline under construction by TotalEnergies in a joint venture with the NNPC) got caught in the crossfire.

A quick examination of the magnitude of disruptions experienced in the oil sector thus far can be seen in the numbers extracted from different previously released FAAC reports from the crude oil marketing division of the NNPC in 2021. The report disclosed crude oil leakages at the different terminals printed at 10.9mbbl, 14.8mbbl and 20.3mbbl in Q1-2021, Q2-2021 and Q3-2021, respectively, to give an aggregate of 46.0mbbl of crude oil volumes that were shut-in in the first three quarters of 2021. These amounted to a total of N1.3tn cumulative loss in crude-oil production value, using $61.32/bbl, $69.08/bbl, $73.22/bbl average prices of Brent crude for Q1, Q2 and Q3-2021, at an official exchange rate of  N411.95/$.

In 2022, the FG budget assumes oil production of 1.88mbpd at a benchmark price of $62.00/b. However, given security challenges in the oil sector, as well as underinvestment, Nigeria is unlikely to reach such lofty production levels. Nonetheless, given the low base from 2021, we expect a modest improvement in oil production in 2022, as technical difficulties at oil fields get resolved.

Proshare Nigeria Pvt. Ltd.

Related News

  1. Oil Bulls Begin the Year with a Bang - OIR 110122
  2. Geopolitics and Production Problems Push Oil Prices Higher - OIR 070122
  3. 2021 Oil Price Rally Offset by Subpar Output
  4. Sentiment Shifts in Oil Markets as Demand Fears Fade - OIR 040122
  5. The Oil Thieves of Nigeria - OpEd by Dr. Reuben Abati
  6. Oil Set to End The Year On a Bullish Note - OIR 281221
  7. Tight Crude Inventories Push Brent Crude Oil Prices Back to Mid-$70s - OIR 241221
  8. Oil Prices Bounce Back on Bullish News - OIR 211221
  9. Are Oil Markets Already Oversupplied? - OIR 171221
  10. Oil Prices: Uncertainties Linger Amid Omicron Variant


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP