Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.

Nigeria’s crude oil sales for the month of May are facing significant hurdles as a result of subdued demand from European buyers, signaling a challenging start to the month for one of Africa’s largest oil producers.

Reports from industry insiders suggest that approximately 10 cargoes of Nigeria’s crude oil designated for May loading are still available for purchase.

While this figure represents about a fifth of the country’s total exports for the month, it indicates the sluggish pace at which Nigerian crude is being absorbed by the market.

The slow movement of Nigerian barrels comes against the backdrop of a broader bearish sentiment in the Atlantic Basin crude market.

A surge in U.S. oil exports has weighed down prices, affecting refinery feedstock demand not only in Europe but also in West Africa.

Despite European refineries resuming operations after seasonal maintenance, prices for Nigerian crude as well as other alternatives like Azeri Light and West Texas Intermediate, have struggled to gain traction.

James Davis, director of short-term oil market research at FGE, commented on the situation, noting, “We’ve got much weaker margins so crude demand is taking a hit.”

One of the factors contributing to Nigeria’s lag in crude oil sales is the insistence by sellers on premiums over the Dated Brent benchmark. These premiums, however, proved too high for European refiners, prompting a reassessment of pricing strategies.

Christopher Haines, global crude analyst at Energy Aspects Ltd., explained, “May cargoes were at a premium that didn’t work that well into Europe, but lower offers have seen volumes move.”

While some Nigerian crude grades have become more competitively priced, especially for markets like Asia and the Mediterranean, the overhang of unsold cargoes persists. June and July shipments remain on sale, further complicating the outlook for Nigeria’s oil exports in the coming months.

In contrast, Angola, another major oil-producing nation, has experienced relatively stable sales to China. With less than 10 shipments for June loading seeking buyers out of 37 scheduled, Angola’s medium-to-heavy sweet crude has found more favor with Chinese refiners compared to Nigeria’s lighter output.

As global oil markets remain volatile, Brent crude oil prices edged closer to the $83 per barrel price level following reports of a decline in US crude inventories.

The uptick in prices comes amidst ongoing concerns about supply constraints and rising demand, painting a complex picture for energy markets worldwide.

The latest data from the American Petroleum Institute (API) revealed a notable decrease of 3.1 million barrels in nationwide crude stockpiles for the previous week.

Also, there was a drawdown observed at the critical hub in Cushing, Oklahoma, a key indicator for market analysts tracking US oil inventories.

Investors and traders have been closely monitoring these inventory reports, seeking clues about the supply-demand dynamics in the global oil market.

The decline in US crude inventories has added to the optimism surrounding oil prices, pushing Brent towards the $83 threshold.

The positive sentiment in oil markets is also fueled by anticipation surrounding the upcoming report from the International Energy Agency (IEA).

Market participants are eager to glean insights from the IEA’s assessment, which is expected to shed light on supply-demand balances for the second half of the year.

However, the recent rally in oil prices comes against the backdrop of lingering concerns about inflationary pressures in the United States.

Persistent inflation has raised questions about the strength of demand for commodities like oil, leading to some caution among investors.

Furthermore, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) face their own challenges in navigating the current market dynamics.

The group is grappling with the decision of whether to extend production cuts at their upcoming meeting on June 1. Questions about member compliance with existing output quotas add another layer of complexity to the discussion.

Analysts warn that while the recent decline in US crude inventories is a positive development for oil prices, uncertainties remain.

Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. in Singapore, highlighted the potential for “fraught and tense OPEC+ dynamics” as member countries seek to balance their economic interests with market stability.

As oil markets await the IEA report and US inflation data, the path forward for oil prices remains uncertain. Investors will continue to monitor inventory levels, demand trends, and geopolitical developments to gauge the future trajectory of global oil markets.