Nigeria Now Fourth Highest Crude Producer in Africa as Oil Rigs Count Declines by 35.5%

Emmanuel Addeh in Abuja

The active oil rigs in Nigeria declined in September, amid a record low production of 938,000 barrels per day (bpd) for the month, about 35,000 bpd lower than the 972,000 bpd in August.

With the country still struggling with crude oil production challenges, a THISDAY analysis of the latest data from the Organisation of Petroleum Exporting Countries (OPEC) showed that the total rigs count fell from 10 in August to seven in September, about 35.5 per cent overall reduction.

A review recently carried out indicated that the only time in recent history that Nigeria experienced such abysmally low drilling activities was over 30 years ago.

In recent times, the country’s active rigs have progressively decreased, but was made worse after Nigeria began shutting down many of its offshore platforms as oil prices took a downward slope and the producers’ group embarked on production curbs to stabilise the market in 2020.

However, despite the remarkable recovery in global crude oil demand, Nigeria has been unable to ramp up production, following massive theft of the resource in the Niger Delta as well as shutdowns due to frequent equipment failure.

In the oil and gas industry, the rig count is a major index for measuring activities in the upstream sector.

But in contrast, the report showed Saudi Arabia had 72 active rigs during the period under review, the United Arab Emirates (UAE) had 50 operational rigs while Iraq had 55 during the month. For non-OPEC countries, the United States led with 763 oilrigs while Canada and Mexico had 93 and 43 active rigs respectively.

For non-OPEC countries, the United States had 763 oilrigs in September, while Canada and Mexico had 211 and 51 active rigs respectively.

A comparison of the country’s average oil production per day in 1997, as indicated in the last Nigerian National Petroleum Company (NNPC)’s yearly statistical bulletin, showed that while Nigeria pumped 2.344 million barrels per day, plus condensates over two and a half decades ago, it can barely produce 45 per cent of that figure today.

Furthermore, while for instance, 26 rigs were in operation, on both onshore and offshore terrains, in 1997, Nigeria as at January this year had just about 12 active oil rigs, with about half of them not even in use. That number has now fallen to seven.

It came as Angola, Algeria and Libya have overtaken Nigeria as Africa’s highest crude oil producers, according to the cartel’s Oil Market Report (OMR) for October.

According to the report, while Nigeria’s crude oil production in September averaged of 937,000 bpd, Angola’s was 1.09 million bpd, Algeria’s was 1.05 million bpd while Libya which has not been self-reporting its production because of the crisis in the country drilled 1.152 million bpd (secondary sources).

Despite assurances by the various government agencies, what the OPEC figures imply is that rather than improve, the country’s oil production has actually deteriorated in the past months.

Fingering massive theft as one of the reasons for its inability to meet its quota, the federal government had also months ago, deployed heavy military presence in the Niger Delta to curb the menace and signed a contract of N4 billion with ex-militant Mr Government Ekpemupolo also known as Tompolo.

But the OPEC data has now confirmed that the action of massive military deployment has not made any difference, as things appear to have gone worse since the rejigging of the security arrangement in the region.

There seems to be no respite in sight with the current waning investment as rich countries and renewables-minded investors continue to pile pressure on multinational oil companies to stop the funding of new oil activities abroad.

Of the 1,946 rigs existing count globally, according to the OPEC data, 380 belonged to member countries, while non-OPEC had 1,566, underscoring the fact that the international oil cartel has also been struggling with production.

Generally, in the oil industry, higher oil prices as it currently obtains, mean higher rig counts, which also mean higher production. In the opposite direction, lower prices mean less rigs and falling production. However, Nigeria currently lacks capacity to ramp up production.

Aside the positive correlation between number of rigs and oil production, there are also many jobs attached to rigs when they are operational, meaning less rigs, less jobs in the oil sector.

The upstream commission has said that although Nigeria’s rigs could be as many as 53, less than 20 per cent of that number has been near active in the last months.

In terms of terrain, of the 53 rigs, 33 are onshore, 11 are offshore while nine are found in the swamps.

It is believed that with the fixing of the pipeline which hitherto had up to 90 per cent of crude oil pumped into it stolen or spilt, Nigeria’s production will be substantially increased.