THUR, NOV 09 2023-theGBJournal|According to the Nigerian Upstream Regulatory Commission (NUPRC), Nigeria’s aggregate crude oil production (including condensates) declined after two consecutive months of increases by 0.7% m/m to 1.56mb/d in October (September: 1.57mb/d).
With the breakdown provided, it is note that the low crude oil production in the review period was primarily driven by the shortfall in Forcados (-3.7% m/m) and Escravos (-4.7% m/m) production terminals, which were enough to offset the 43-month high production recorded at the Bonga (+18.9% m/m) terminal.
While progress is still underway as regards the fight against crude oil theft and pipeline vandalism, we believe that frequent leaks from pipelines and intermittent oil terminal shutdowns for repairs pose downside risks to crude oil production in the near term.
Thus, we maintain our 2023E average crude oil production estimate of 1.42mb/d (vs FGN’s estimate: 1.69mb/d), a relatively slight improvement compared to 2022FY production volume (1.37mb/d).
Consequently, we expect the government’s oil revenue performance to remain underwhelming over the short term.
With the launched of a new oil grade this week, the Nembe, Nigeria hopes to prop up production across the country, to remedy production shortfall while eyeing European customers.
The Nembe is previously fed into the Bonny Light stream through the frequently sabotaged Nembe Creek Trunk Line.
Meanwhile, oil prices continued sustained its fall this week as demand concerns and inventory build-ups added to bearish sentiment, but with an OPEC+ meeting at the end of the month and the potential of an escalation in the Gaza war, analysts forecast things could change rapidly.
Both the Brent futures and the West Texas Intermediate crude are down 4% for week despite gaining $1.57 to $81.58 a barrel and $1.54 to $77.28 respectively today.
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