Rising crude oil supply from Nigeria, Libya pressures prices in global market

Nigeria’s oil and gas industry may be disrobing itself of the garb of stagnancy and lethargy which it had assumed in recent times, as crude oil supply from the country, as well as Libya, has been pressuring crude oil prices in the global market, BusinessDay has learnt.

Crude oil prices on New York Mercantile Exchange (NYMEX) continued their southward journey on Tuesday amid waning Syria concerns and rising crude oil production in Nigeria and Libya, Commodity online reported.

In what may be seen as signs that production in the country is returning to normalcy, earlier this month, Italian oil major Eni SpA removed a force majeure on its exports of Brass River crude that had been in place since March. Also, Shell Petroleum Development Company (SPDC), Royal Dutch Shell Plc’s Nigerian subsidiary, partially lifted a force majeure on its exports of Bonny Light on August 30 after it successfully repaired its Nembe Creek Trunkline.

But continued incidents of theft damaged prospects for a long-term recovery in production as SPDC again shut the Nembe Creek on September 6 and its Trans Niger Pipeline last week after reports of a leak caused by theft.

United States (US) crude oil was said to have declined around $1.16 to 103.59 per barrel, the lowest since August 8.

With more than 200,000 barrels per day (bpd) of crude oil being lost to pipeline vandalism, crude oil theft and spills, Nigeria was recently reported to have ranked fourth in the league of countries who contribute to global oil supply outages, according to estimates from analysts at Deutsche Bank and other shipping and industry sources.

According to the Nigerian National Petroleum Corporation (NNPC), Nigeria’s daily production has risen to 2.4 million barrels per day (bpd). The corporation said in a statement last week.

The country’s oil production had averaged 2.29 million bpd in the second quarter of this year, according to the National Bureau of Statistics. Earlier, crude oil production declined to 2.2 million in the first quarter.

In Libya, crude oil output has jumped to higher than 600,000 bpd.

Libya was said to have the biggest outages losing 1.2 million bpd due to strikes and protests, according to the recent analysis.

In Syria, outages amounted to 300,000 bpd caused by civil war and Iraq lost 200,000 bpd due to disruption to northern pipeline. Joint efforts from the US, Russia and UN Security Council have almost succeeded to resolve Syrian crisis.

Nigeria, which earns more than 90 percent of its foreign exchange and about 80 percent of government revenue from its oil industry, has seen decline in production and revenue in recent times. Government’s gross revenue dropped 42 percent month-on-month to N497.98 billion ($3.1 billion) in July from N863.02 billion received in June, because of disruption to oil production caused by thieves hacking into pipelines.