*As production further drops to 1.1mb/d
Lagos — Africa’s largest economy’s upstream sector is currently experiencing a downtime- findings revealed that 12 of its oil rigs were shut down last year.
Statistics from OPEC’s Monthly Oil Market Report, MOMR for January showed that Nigeria had a total of 19 oil rigs as at first quarter of 2020 however, the number dropped to 7 in the last quarter, precisely in December.
With the coronavirus taking its toll on world economies, especially oil-dependent ones, Nigeria and most OPEC member nations, last year, had suffered financial crises due to low oil demands.
Low oil demands eventually led to most upstream firms shutting down rigs.
Nigeria whose main source of revenue is crude oil had 19 functional oil rigs the first quarter of last year, was left with 11 at the second quarter.
And as the virus further bites deeper into oil demand, the country’s rigs quickly dropped to 8 in the third quarter, and eventually 7 as of December.
Due to low exploration, statistics from same OPEC as provided by direct sources, said the country’s oil production had further dropped to 1.1million barrels per day in December from 1.3mb/d reported in October and November.
A production of 1.1mb/d was the lowest output by the country in at least three years.
Nigeria’s oil sector had fallen by 13.9% in 2020 compared with a 6.6% decline in the second quarter of same year.
This in turn affected the country’s real GDP which declined by 3.6% y-o-y in 3Q20 after seeing a 6.1% y-o-y contraction in 2Q20.
Like most countries around the globe, particularly commodity producers, OPEC says outlook for Nigeria’s economy remained challenged by COVID-19 developments and developments in oil prices, along with domestic inflationary pressures and fiscal constraints.
However, as the world is optimistic about a sharp growth in demand and oil price in 2021, OPEC at the beginning of the year, reiterated plans to add 500, 000b/d to its output starting from January.
On the other hand, Nigeria slashed its earlier projected output from 2.1mb/d to 1.7mb/d in its N13 trillion proposed 2021 budget.
However, current output of 1.1mb/d is still a distance away from its 1.1mb/d projection for the year.
Although the country had proposed a $40 per barrel oil benchmark in this year’s, Brent sold at $55.74/b as at 11:25 AM Nigerian time on Thursday.
Experts have also linked Nigeria’s low exploration to the setback in passage of the Petroleum Industry Bill, PIB, which according to them; have been a major reason investors have held back in signing of several major downstream Final Investment Decisions, FIDs.