Nigeria’s oil rigs count declined 13.3 per cent in April, in tandem with the country’s crude oil underproduction during the month, according to a THISDAY review of the latest data released by the Organisation of Petroleum Exporting Countries (OPEC).
The rigs count numbers fell from 15 to 13 during the month under review, raising doubts over hopes of new investment in the oil and gas sector in the country, at the beginning of the year.
In the oil and gas industry, the rig count is a major index for measuring activities in the upstream sector, including drilling and employment.
Nigeria’s crude oil production fell to a seven-month low of 998,602 barrels per day in April, far lower than the 1.74 million barrels per day OPEC production quota allocated to the country during the month.
The depleted production figure last month was partly connected with the shutting down of oil platforms and declaration of force majeure by Exxon Mobil in Nigeria mid last month, especially at the Qua Iboe asset. Production has now resumed after the disruption.
The last time Nigeria had production of less than 1 million was in August last year when it drilled 972,394 barrels per day.
According to the OPEC data, Nigeria’s average rigs count was 11, seven and 10 in 2020, 2021 and 2022 respectively, but had recently grown to 15 as new investments began trickling into the country, including the arrival Dolphin Drilling and Blackford Dolphin drilling rigs in the country earlier in the year.
In recent times, the country’s active rigs have progressively decreased, but were made worse after Nigeria began shutting down many of its offshore platforms as oil prices took a downward slope and the producers’ group embarked on production curbs to stabilise the market in 2020, following the upsurge of the Covid-19 pandemic.
Furthermore, there has been massive underinvestment in the sector, leading to depleting oil rigs as International Oil Companies (IOCs) divested their assets in tandem with the ongoing energy transition to renewables.
Despite the remarkable recovery in global crude oil demand, Nigeria had been unable to ramp up production, following massive theft of the resource in the Niger Delta as well as shutdowns due to frequent equipment failure.
While for instance, 26 rigs were in operation, on both onshore and offshore terrains, in 1997, Nigeria has had the number remarkably slumped in recent years.
But as opposed to Nigeria’s 13 rigs in April, the United States as of the month under consideration, according to the OPEC MOMR data, had 752 oil rigs, Canada had 108, while Mexico had 48, bringing the Organisation for Economic Cooperation and Development (OECD) Americas’ total to 910 rigs.
In Africa, Algeria had 31 in April, while Angola had nine oil rigs. Besides, Iran’s rigs were 117, Iraq’s were 62, Libya had 14 even as Saudi Arabia had 84 and the United Arab Emirates (UAE) had 57.
In total, OPEC members’ rig count were 420 while world rig count stood at 1, 889, a decrease of 65 rigs during the month.
The OPEC data on crude oil rigs also aligns with Baker Hughes’ data, which also said that in Nigeria it decreased to 13 in April from 15 in March of 2023, but up from 11 one year ago, that is a change of 18.18 per cent from 2022.
Nigeria Extractive Industries Transparency Initiative (NEITI), revealed sometimes ago that in the period spanning between 2009 and 2020, Nigeria lost as much as 619.7 million barrels of crude oil valued at N16.25 trillion to oil theft, whix has seriously reduced investment in the sector.
The losses were from theft and sabotage, based on information and data provided by an average of eight companies covered by NEITI process over the years, the organisation said.
Declining oil production is expected to negatively affect this years’ budget, with key assumptions including an oil price benchmark of $75 per barrel; exchange rate at N435.57 per dollar; oil production of 1.69 million barrels per day and inflation rate of 17.16 per cent.
The Nigerian National Petroleum Company Limited (NNPC), the Nigerian Upstream Petroleum Regulatory Commission (NURPC) and the ministry of petroleum, have all assured Nigerians of the return of investment with the passage of the Petroleum Industry Act (PIA).
