Nigeria’s economy may be hit with a further plunge following yesterday’s report by Bloomberg that a 180,000-barrel per day (bpd) pipeline in the country has not transported any crude across Africa’s top oil producer since the middle of June due to oil theft.
OPEC member, Nigeria, has been suffering for years of rampant oil theft from pipelines which has often forced operators to shut down crude links for repairs and even declare force majeure on crude loadings because oil couldn’t reach terminals on time.
The pipeline targeted in the latest oil theft, Trans-Niger Pipeline, has not been formally shut yet, Bloomberg’s source said on condition of anonymity because they were sharing information that has not been made public yet.
Per Bloomberg’s estimates, the Trans-Niger Pipeline, with its capacity of transporting 180,000 barrels per day (bpd), accounts for around 15 per cent of Nigeria’s latest daily average oil production.
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Oil theft has been a never-ending issue in Nigeria’s oil industry for years, crippling supply and production and making international majors warier of investing in production assets in Nigeria’s onshore.
A lack of investment and capacity has prevented Nigeria from reaching its target production under the OPEC+ agreement for more than a year.
Nigeria has been the biggest laggard in the production pact for several months. As of June, Nigeria was already pumping 500,000 bpd below its OPEC+ target. Nigerian crude oil production averaged 1.238 million bpd last month, according to OPEC’s latest Monthly Oil Market Report (MOMR), while Nigeria’s June quota was 1.772 million bpd.
Unlike other crude oil producers, Nigeria has not been able to take advantage of the multi-year high oil prices this year. Nigerian oil revenues have come in 61 per cent below target for the first four months of 2022. That’s despite crude oil trading at highs not seen in years. Nigeria continues to battle oil theft, pipeline vandalism, and most critically, high gasoline prices, which the country subsidizes.
