Nigerian rig numbers decline as OPEC lowers oil demand outlook in 2021

Oil rig

Confirming reports of low production and the country’s inability to meet its crude oil quota, the latest monthly report from the Organization of the Petroleum Exporting Countries (OPEC) showed that the number of rigs drilling in Nigeria went from 11 to nine.

Despite the federal government’s desire to pump more oil and increase acreage, operational setbacks and sabotage of major pipelines continue to undermine optimal production.

Compared to the 11 platforms recorded in September of this year, the October count is comparable to the records of 2020 and lower than the 16 platforms recorded in 2019.

Although the S&P Global Platts survey showed that Nigeria fell to 1.37 million barrels per day in October, 261,000 bpd below its OPEC + quota, due to current challenges, the monthly oil market report of OPEC (MOMR), released yesterday, showed the country recorded 1.35 mbpd according to secondary sources and 1.23 mbpd based on direct communication with the cartel.

Platts’ investigation found that Bonny Light, Escravos and Forcados all faced production issues in 2021, while the production of other key qualities such as Qua Iboe, Brass River, Agbami, Akpo and Egina is also remained consistently low this year.

Although Nigeria is expected to produce 1.66 million barrels per day of crude under the new OPEC + deal for December, higher than the 1.4 million barrels per day currently recorded by the country, there are concerns that the country may reach the volume despite the assurances of the Minister of State for Petroleum, Timipre Sylva.

Meanwhile, OPEC has downgraded its forecast for oil demand growth for this year, in part because it assumes the pace of the recovery has been affected by high prices.

In its latest MOMR, the cartel fixed this year’s global oil demand at 96.44 mb / d, up 5.65 mb / d for the year but down 160,000 b / d from its previous projection.

With the recent price hike, OPEC said the lower forecast was due to slower-than-expected consumption in the third quarter in major markets in India and China.

OPEC kept next year’s demand growth assumption unchanged at 4.15 mb / d, raising demand to 100.59 mb / d, but warned of growing economic challenges in China and the Covid-19 pandemic, which is expected to remain “a dominant factor” during the northern hemisphere winter.

At last week’s OPEC + meeting, the alliance avoided calls from some consumer countries for a faster increase in production and remained firmly in support of its plan to increase collective production quotas by 400,000 bpd next month.

In its latest report, the cartel kept its forecast for growth in the supply of non-OPEC liquids this year at around 700,000 b / d, for an average of 63.64 mb / d, and still forecast growth of 3 million bpd next year. He expects Russia and the United States to be the main engines of growth next year, but said investment levels, especially in the US shale sector, remain a concern.

In light of the drop in demand, OPEC cut its planned 2021 call on its own members’ gross from over 100,000 b / d to 27.65 mb / d, and by a similar amount the next year at 28.66 mb / d. The group’s production was 27.5 Mb / d last month, up 217,000 b / d from July, according to an average of secondary sources including Argus.

Citing preliminary data, Opec said OECD commercial stocks fell from 18.5 million bl in September to 2.81 billion bl, or 374 million bl less than a year earlier. and 163 million bl below the 2015-19 average.

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Felix J. Dixon