A series of attacks on Nigeria’s oil infrastructure has pushed its output of crude close to a nine-year low, putting intense pressure on the country’s finances.
Attacks late last week forced Chevron to shut its Okan offshore facility, taking out 35,000 barrels per day (bpd).
While Shell said the latest unrest had not yet impacted production at Bonga, its Forcados field is still closed and under force majeure following a February subsea pipeline attack, taking out 250,000 bpd.
The violence has depressed production to roughly 1.69 million bpd in May, the lowest since at least June 2007, when production fell to 1.68 million bpd, International Energy Agency data shows.
A small reduction from any field would quickly send output to the next low, seen in August 1994, when it hit 1.46 million bpd, according to the IEA data.
“It’s really not a good situation,” said Eugene Lindell, senior energy analyst with JBC Energy in Vienna, noting that the global excess of crude was keeping Brent prices from moving significantly higher on the back of the outages.
“They have less production, and they’re getting less bang for their buck,” he said.
The country’s 2016 budget, signed into law just last week, assumes 2.2 million bpd of oil production at $38 a barrel. In a country analysis released late last week, the U.S. Energy Information Administration noted that pipeline sabotage and oil supply disruptions had increased in 2016, putting direct pressure on the country’s finances.
“Because Nigeria heavily depends on oil revenue, its economy is noticeably affected by changes to its oil production and/or to global crude oil prices,” the report said.
President Muhammadu Buhari has said there would be a crackdown on “vandals and saboteurs” in the country’s oil-producing Delta region, analysts said the violence could scare investment away from the country.
“If it continues like this … there are companies who will probably not consider Nigeria” for upstream investments, Lindell said.
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