Nigeria’s oil output drops further as Agip declares force majeure on Brass River

Nigeria’s oil output drops further as Agip declares force majeure on Brass River

Nigeria’s oil output drops further as Agip declares force majeure on Brass River

The pangs of the several production halts may have continued to assail Nigeria's economy, as the Nigerian Agip Oil Company (NAOC) has shut crude oil production from its Brass River facility.

This is coming on the heels of Angola taking over from Nigeria as the highest oil producing nation in Africa.

The Organisation of Petroleum Exporting Countries (OPEC) latest monthly report revealed that Nigeria's oil production fell by 67,000 barrels per day (bpd) in March.

The low production level being recorded by the country may not be unconnected with the production halts at Brass River coupled with the Shell Petroleum Development Company (SPDC's) operated Forcados export terminal that was shut in February this year.

Forcados, which has the capacity to export about 400,000 barrels per day (bpd), was scheduled to export some 249,000 barrels bpd in February and March, but the constraints to repair works on the vandalised pipeline have dashed the hope of further export through the lines in the last few months.

However, there were indications that the repair works on the pipeline feeding Forcados crude oil to the export terminal may last till June.

Agip reportedly declared a force majeure on the Brass River grade of crude oil, after a fire was detected on the pipeline that lifts crude to the terminal.

About 142,000 bpd of Brass River was due to be exported in May according to a loading programme.

According to the OPEC report, Nigeria produced 1.677 million bpd in March, down from 1.744 million barrels in February, while Angola oil output rose from 1.767 million bpd to 1.782 million in the same period.

This is the second time in four months that Angola would overtake Nigeria's crude oil production level.

OPEC has reviewed the estimates for 2016 world oil demand lower by 50,000 bpd, to a total of 1.20 million bpd of projected oil demand growth for the year.

According to the report, the forecast for 2016 is subject to many uncertainties, mainly the pace of economic growth in major oil demand centres, the removal of subsidies in oil-producing countries, mild weather in the Northern Hemisphere and the diverse effects of oil prices in different regions.

Non-OPEC members' supply for 2016 was however forecast to contract by 0.73 million bpd, indicating downward revision by 30,000 bpd, compared with an average of 56.39 million bpd projected a month earlier.

The main reason for this downward revision was lower expectations for crude oil production from China's onshore mature fields in the year. Moreover, further declines are expected to come from the United States, United Kingdom, and Colombia.

"Deferring of major new projects due to reduced cash flow in 2016 following the fall in global oil prices has been the main reason for a contraction in the current year. Global upstream investments, particularly in high-cost regions, remain suspended until a sustained price recovery can be maintained," it stated.

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