The CBN’s Economic Report for May showed that Nigeria’s oil output (including condensates and NGLs) decreased by 20% to 1.35 million barrels per day (mbpd) from 1.68mbpd in April. The allocation of crude oil for domestic consumption remained at 0.45mbpd or 13.95mb during the period under review. Meanwhile, crude oil exports stood at 0.90mbpd, a 27% decline from 1.23mbpd recorded in the preceding month.
The decline observed in crude oil production was attributed primarily to attacks on oil and gas infrastructure in the Niger Delta region. The federal minister of state for petroleum, Dr. Ibe Kachikwu, recently revealed the FGN is targeting zero shutdowns on the back of fairly good dialogue with the militancy group.
Based on the national accounts for Q2 2016 released by the National Bureau of Statistics (NBS), the oil economy shrank by -17.5% y/y as a consequence of the heightened sabotage.
We gather that Nigeria’s largest export stream, Qua Iboe, has resumed loadings after being shut in for over two months due to pipeline vandalism. This should add an additional 300,000 b/d to the country’s total production.
However, last week the Trans Forcados pipeline which feeds crude from the Niger Delta to the Shell-operated export terminal was attacked. Trans Forcados had just restarted operations after several months of force majeure due to earlier attacks.
Sources: CBN; FBNQuest Research
At an estimated average of US$47.59 per barrel, the average spot price of Nigeria’s reference crude (Bonny Light) implied an increase of 13% compared with the level recorded in April. The uptick was attributed largely to increasing global oil supply outages as well as ongoing declines in US rig count.