Output in Nigeria falls

Nigeria was seemingly unscathed by the raging financial storm in the United States and capital markets worldwide, but steep losses in crude oil prices signaled yesterday that the country may take a hit after all.

Demand worries further drove down oil prices to $91.15 a barrel on Tuesday night while Nigeria’s crude oil production dropped by about 150,000 barrels per day.

Although an official of the Nigerian National Petroleum Corporation (NNPC) told Reuters news that Nigeria’s production capacity, which had appreciated to 2.2 million per barrel, had dropped to 2.1 million barrel per day following the escalation of violent attacks in the oil-rich region, industry sources said production had reduced by more than 150,000 barrel per day.

"Production had been at around 2.2 million barrels per day. We are now at 2.1 (million)," a senior official with the state-oil firm NNPC told Reuters.

But Nigeria’s external reserves of some 64 billion dollars kept mostly in the US was declared safe by top government officials who said the 15 global banks that handle the reserves were still very solid.

Although the 2008 budget was pegged at $53.8 per barrel well above current oil prices, Nigeria’s revenue at the time of an oil boom has been less than expected.

Finance Minister Samsuddeen Usman noted in an interview that, ‘Revenues have so far underperformed budgeted levels due principally to a series of oil production shut-ins. The country’s average oil production from January to June 2008 was 2.024 million barrels per day compared with a target of 2.45 mbpd’.

With dwindling crude oil prices, the country is losing both ways-in production and price.
The country’s oil production capacity had since 2006 suffered set backs owing to escalation of militancy in the region.

The country normally produced between 2.5 and 2.6 million barrels per day, but attacks on oil facilities and abduction of expatriate workers had forced production to fluctuate between 1.4 and 1.9 million barrels per day.

Government officials on Monday stated that some 115,000 bpd of oil production might have been halted in the last four days.

The drop in the country’s production has placed it as the second- largest oil producer in Africa after it was displaced by Angola this year.

Meanwhile, OPEC said it would cut its world oil demand growth forecast for 2008 to 1.02 per cent from 1.17 per cent. In its latest monthly report, OPEC said it would monitor consumption closely as global financial turmoil weakens the world economy.

But militants and the Joint Task Force in the Niger Delta continued their usual claims and counter claims over attacks on oil facilities. While the Movement for the Emancipation of the Niger Delta (MEND) claimed yesterday that it destroyed a pipeline belonging to Shell Petroleum Development Company (SPDC) at Ibiama and Bakana in Degema Local Government Area of Rivers State, JTF countered the claim, saying the force intercepted the militants who tried to blow up the pipeline.

Author: Jo Amey