Nigeria, Saudi Record Biggest Increase in Oil Output

• Nigeria, Saudi Record Biggest Increase in Oil Output

Crude oil production in Nigeria rose by 88,700 barrels per day last month, the second biggest increase among its peers in the Organisation of Petroleum Exporting Countries.

But the fresh threat by Niger Delta militants to attack some oil and gas facilities in the region may pose a risk to the nation’s oil production.

OPEC, in its Monthly Oil Market Report for January released on Friday, put Nigeria’s output at 1.861 million bpd for December, from 1.785 million bpd in the previous month, according to secondary sources.

The 14-member oil group uses secondary sources to monitor its oil output, but also publishes a table of figures submitted by its member countries.

Based on direct communication, the nation’s output stood at 1.636 million barrels in December, up from 1.547 million bpd in November, said the report.

Saudi Arabia, the largest producer in the group, recorded the biggest increase in December as it produced 9.98 million bpd, up from 9.89 million bpd in the previous month.

According to the secondary sources, the total OPEC crude oil production averaged 32.42 million bpd in December, a minor increase of 42,000 bpd over the previous month.

“Crude oil output increased in Nigeria, Angola and Algeria, while production declined by 80,000 bpd month-on-month in Venezuela,” the group said in the report.

In Africa, production growth of 50,000 bpd – primarily from Ghana and Congo – is expected for 2018, to average 1.90 million bpd, according to the report.

After a year of ceasefire, militants under the aegis of the Niger Delta Avengers on Wednesday threatened to attack some offshore oil and gas facilities in the oil-rich region in a few days’ time.

In 2016, the nation saw a resurgence of militant attacks on oil and gas facilities in the Niger Delta, causing oil production to plummet to near 30-year lows of around 1.6 million bpd in August.

“This round of attacks will be the most deadly and will be targeting the deep sea operations of the multinationals,” the group said in a statement on its website.

Attacks on pipelines and other facilities in the Niger Delta in 2016 cut the nation’s crude production from a peak of 2.2 million barrels per day to near one million bpd – the lowest level in at least 30 years.

That, combined with low oil prices, pushed the country into its first recession in a quarter of a century – crude sales make up two-thirds of government revenue and most of its foreign exchange.

The militants agreed to a ceasefire in August 2016 – a development that helped pull Nigeria out of recession in the second quarter of last year. But they called off the truce in November last year.

Meanwhile, unsold barrels of crudes from West Africa could put pressure on the premiums of Malaysian crude cargoes for March loading, traders said, according to Platts.

Weaker demand, particularly from independent refineries in China, for February-loading Angolan and Nigerian grades had resulted in an overhang, traders said.

Traders indicated that these grades were now looking for home elsewhere in Asia, competing with other Asia Pacific crudes such as Malaysian crudes.

“West African overhang is more than 10 millions … [There is] no [place] to go,” a Southeast Asian crude trader said.

Another trader noted that the weakening tanker freight rates could mean that Asian buyers might consider the grades instead of Asian regional crudes when they would make their purchases this month.