Amid Crude Oil Production Decline, Nigeria’s Condensate Output Falls by 400,000 Barrels

Emmanuel Addeh in Abuja

Data released by the Nigerian Upstream and Downstream Petroleum Regulatory Commission (NUPRC) , has revealed that Nigeria’s condensate production dipped 400,000 barrels in April, about 5.4 per cent lower than the output recorded the previous month.

According to the data, whereas the country posted 7.7 million barrels in March, the production of condensate fell to 7.3 million barrels in the whole of April, following in the same trend of decline of crude oil, Nigeria’s main foreign exchange earner.

For a number of reasons, the Organisation of Petroleum Exporting Countries (OPEC) excludes condensate output from member countries from its monthly production computation, meaning that member countries can drill as much as possible without exceeding the quota set by the cartel.

Condensate, although still largely regarded as oil is markedly different from the black crude because it’s more toxic, low in density and considerably more explosive than regular crude oil. In addition, crude oil is heavier than condensate.

Experts say condensate is more flammable and more explosive than normal crude oil, making it a bit trickier to transport. It’s also more dangerous for people to operate in areas where condensate is escaping, not only because of an explosion but also the threat of asphyxiation.

It is believed that Nigeria currently has 31.06 billion barrels of crude oil and 5.906 billion barrels of condensate in reserves, amounting to roughly 37 billion barrels of oil in all.

On the positive side, in cases of spills, while oil forms a thick layer on the water surface, which cuts off oxygen for marine life and destroy ecosystems, condensate is first mixed with water and then quickly evaporates, leaving no residue on the surface.

Condensate is also used as refinery feedstock for the manufacture of products such as petrol, jet fuel, diesel and heating fuels, used to dilute heavier crude oils or deployed in production of products like plastic in the petrochemical sector.

The NUPRC data showed that Nigeria’s blended and unblended condensate came mostly from Agbami terminal which produced a total of 2.9 million barrels of condensate during the month under consideration, while  Akpo produced 2.09 million barrels.

Besides, output from Tulja-Okwuibome , another major field which produces condensate was 305,000 barrels during the entire period.

The light oil has helped Nigeria ramp up its in-country production in the last couple of years since Nigeria’s oil production began to decline. Under the last administration, Nigeria borrowed massively due to shortage of oil revenue.

Production has largely declined due to oil theft, vandalism, general sabotage and a lack of investment in the oil and gas sector for a long time due to what investors say is an inclement business environment.

The Nigerian National Petroleum Company Limited (NNPC) has recently put total production of Nigeria’s crude at about 1.6 million barrels per day, clearly adding crude oil to condensate excluded by OPEC.

The data showed that In January, Nigeria produced 7.32 million barrels of condensate; it was 6.75 million in February; 7.7 million barrels in March and 7.3 million barrels in April.

When the daily production of crude oil and condensate are calculated, condensate raised total production from 1.25 million barrels per day in January to 1.49 million bpd.

In February, it increased total production from 1.3 million bpd to 1.54 million bpd; in March it raised output from 1.26 million bpd to 1.51 million bpd while in April total condensate and crude oil production per day was 1.24 million.

The fall in condensate output is also in alignment with the trend in crude oil production, which last year hit a record low of about 900,000 bpd in the last quarter of 2022.

However, efforts to halt crude oil theft had begun to manifest through increased production, with output of crude oil alone, hitting 1.3 million bpd in March, before the sharp drop in drilling in April.

The NNPC had recently assured that it will hit the almost 1.8 million barrels per day OPEC production quota by the end of July and ramp production up to 2 million bpd by the end of 2023.

However, OPEC has cut Nigeria’s baseline to 1.3 million bpd for 2024, due to the country’s inability to consistently meet the quota allocation, raising doubts over Nigeria’s capacity to fund the budget for next year.