The number of functional oil rigs in Nigeria increased by 37.5 per cent in the second quarter of this year amidst a plunge in the country’s crude oil production in the same quarter.
An oil rig or oil production platform is a large structure with facilities to extract and possibly process petroleum and natural gas that lie beneath the seabed.
Latest data on global oil rig count obtained by our correspondent on Friday from the Organisation of Petroleum Exporting Countries showed that Nigeria’s functional oil rigs increased from eight in the first quarter of 2022 to 11 in the second quarter.
It was further observed that the country’s functional rigs had dropped from 10 in the third quarter of last year to seven in the fourth quarter of 2021.
It, however, increased to eight in Q1 2022 before rising to 11 in Q2 2022, as findings showed that in the months of April, May and June this year, 11 oil production rigs in Nigeria were functional in each of the months.
But the rise in rig count for Nigeria did not translate to an increase in crude oil production in the second quarter of this year.
Sunday PUNCH had exclusively reported that Nigeria’s oil production crashed by about 14.94 million barrels in the second quarter of this year, based on latest oil production data obtained from OPEC.
The report had also stated that an analysis of figures released by OPEC and the average cost of crude in Q2 2022 obtained from global oil price reports, indicated that Nigeria’s oil earnings plunged by about N703.76bn, being the worth of the 14. 94 million barrels of crude that was lost during the review period.
It stated that in OPEC’s crude oil production data based on direct communication from its 13-member nations, the organisation revealed that in the first quarter of this year, Nigeria produced 1.299 million barrels of oil per day.
But this dropped to 1.133 million barrels per day in the second quarter, indicating a plunge of 166,000 barrels per day.
This implies that for the estimated 90-day period in Q2 2022, the country could not produce or lost about 14.94 million barrels of crude oil. This, however, was despite the rise in the country’s functional oil production rigs in the same quarter.
Commenting on some of the reasons for the plunge in Nigeria’s oil production despite the rise in rig count, the Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, attributed this to sabotage on oil installations.
Komolafe in a recent oil sector presentation, obtained by our correspondent, said, “As you all know, the nation has suffered significant losses in crude oil production especially in land and swamp terrains due to economic sabotage popularly known as ‘crude oil theft’.
“A major consequence of this nefarious activity is the declaration of force majeure at Bonny Oil and Gas Terminal and shut-in of wells from fields evacuating through the Nembe Creek Trunk Line and the Trans Niger Pipeline.
“A consequential effect of this menace is that the nation only achieved about 60 per cent compliance with Technical Allowable Rate and 72 per cent of its assigned OPEC quota.”
On the other hand, the NUPRC boss stated that the socio-economic impact of production and associated revenue losses to both government and investors was a deep cause for concern for all stakeholders.
He said, “The challenges that stem from this issue include threat to national and energy security, erosion of global competitiveness and ease of doing business, rise in unemployment across the industry, increase in conflicts due to proliferation of arms and widespread HSE (health, safety and environmental) and community concerns, etc.”
Komolafe, however, noted that in light of these issues and government’s production target of three million barrels of oil per day in three years, the NUPRC had developed regulatory initiatives and optimisation strategies aimed at decreasing this menace to the barest minimum in the short run, and eventual elimination in the long run.
He said the strategies involved various industry stakeholders and cuts across techno-socioeconomic and security initiatives.
“It is my utmost belief that the impact of these joint strategies would be felt across the industry in a few months,” he stated.
Komolafe added, “Against this backdrop, the initiative to conduct an industry-wide integrated study on the reactivation of shut-in strings was conceptualised in the commission and approved by me as a low hanging strategy to gain incremental production.” PUNCH