From daily average output of about 800tbpd at the height of militancy in Niger Delta last year to rising average of about 1.6mbpd is an indication of good results from federal government’s dialogue with the Niger Delta militants.
Analysts say since this year, there seems to have been observed drop in vandalism, but a new threat to Nigeria’s rising output may be the United States and Libya who are now looks set to dampen Nigeria’s export of the commodity.
However, production and exports of Nigeria’s popular crude grade, Forcados, continued to be shut in due to a sabotage-related spill on the subsea Forcados pipeline.
Industry analysts have said the decision by the Organisation of Petroleum Exporting Countries to cut output by over 1.2 million bpd, coupled with another 600,000 bpd cut by a group of non-OPEC countries, will tighten oil supply and result in higher crude oil prices.
Analysts from Ecobank forecast oil prices to average $48.74 this year and range between $38 and $63. Global benchmark, Brent crude, traded around $56 on Friday.
Head of Energy Research at Ecobank Group, Mr. Dolapo Oni was of the view that these higher oil prices could potentially make it attractive for US oil exports to reach markets as far as Asia.
According to him, “Already, a few traders such as Trafigura and oil producer BP’s trading arm are arranging cargoes to Asia; we suspect that as oil prices stabilise in the higher 50s, we could see more of these sort of trades.
“This could potentially create a challenge for Nigerian crude grades, resulting in a similar cut in prices across grades such as had to be done in 2016.”
He submitted further while Nigeria managed to export an average of 200,000 bpd to the US in 2016 due to decline in shale production, resurgence in shale production as oil prices rise and stay above $50 could see the country’s exports to the US also shrink.
“Another challenge is also the rise in Libyan oil output, which could potentially challenge Nigeria’s cargoes in Europe,” he said, noting that Libya was also exempted from the OPEC cut like Nigeria and “is looking to ramp up production from 685,000 bpd currently to over one million bpd by the end of 2017, most of which will be targeted at refineries in Europe, which find Nigerian crude equally attractive or comparable.
