Nigeria’s rig count soars as NNPC, partners set to pump more oil

• Raises hope of meeting OPEC October quota

For the first time since 2020, Nigeria’s rig count, which had been on the decline, soared to 11 in August, signalling readiness by the Nigerian National Petroleum Corporation (NNPC) and its partners to pump more oil.

In the last few months, Nigeria had been unable to meet the quota allocated to it by the Organisation of Petroleum Exporting Countries (OPEC), due to weakening infrastructure and difficulty in restarting oil facilities that were shut down because of the cuts in production assigned to the country.

But latest data from the OPEC Monthly Oil Market Report (MOMR) indicated that the country’s oil rigs have climbed from a low of five in the second quarter of 2021, to 11, as of last month.

A further analysis of the data showed that while in 2018, the average rigs count was 13, it was 16 in 2019, but fell to 11 in 2020, a reduction by five oil rigs.

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Since the third quarter of 2020, the count had continued to slump, first to eight in that quarter, and seven in July, but with an addition of four rigs for the month of August, raising hope of more production.

Put side by side with a country like Algeria, the North African nation has a high of 50 and low of 21, while the United Arab Emirates (UAE), for instance, has a high of 62 and a low of 40.

In the oil industry, the rig count is a major index of measuring activities in the upstream sector, with a breakdown showing that Nigeria utilised six, seven, and six rigs in January, February, and March 2021, respectively, against 21, 23, and 21 used in the corresponding period of 2020, when production was about two million bpd.

Despite asking for a higher baseline, in June, July and August, Nigeria failed to meet the existing quota assigned to it by OPEC for the months, losing 90,000 barrels per day in the month of August alone.

When cumulated for the entire month, this amounted to roughly 2.8 million barrels, making last month’s production of 1.43 million bpd one of the lowest in five years.

While Saudi Arabia and Iraq were the main drivers of OPEC’s production for August, with an additional production of 290,000 bpd and 200,000 bpd, respectively, Nigeria, which has a capacity to produce two million bpd, other things being equal, slumped from its July figure of 1.520 million bpd, according to an OPEC document.

Production growth in Nigeria, Africa’s highest oil producer, going by recent data, is proving a major challenge due to infrastructure challenges and technical difficulties, leading to shut-ins.

In addition to decreasing rig counts and highly degraded facilities due to old age and lack of investment, there have also been instances of community workers’ protests, which incessantly disrupt operations, leading to severe losses.

The previous month, according to document quoted by THISDAY showed that the NNPC and its partners lost 6.035 million barrels of crude oil to emergency shutdowns.

In its August presentation to the Federation Account Allocation Committee (FAAC), which held between the 18th and 19th of last month, the corporation recorded that there were 32 of such incidents throughout its facilities in the country.

A breakdown of the losses, according to the document, indicated that the highest combined shortage of 1.62 million barrels was from Qua Iboe, with 200,000 barrels due to production shut-in arising from flare management and low well head pressure.

Still on Qua Iboe, a further 530,000 barrels were lost to shut-ins following tank top concerns, 650,000 barrels as a result of production cut-back as directed by the Department of Petroleum Resources (DPR), as well as a loss of 240,000 barrels due to a gas leak on one of the assets.

This was followed by losses from the Forcados facility, which shed 200,000 barrels, 84,000 barrels, 30, 000 barrels and 80,000 barrels, respectively on different days, with reasons ranging from leak repairs, tank top issues, fire incident, and declaration of force majeure.