adminLondon — Oil theft looks set to push Nigeria off its spot as top African crude oil exporter in May and exports could fall to their lowest since records began in 2009, data indicated on Wednesday. Nigerian exports in May are set to be at around 1,59 million barrels per day (bpd) excluding the Forcados and Ebok grades of crude oil, which had still not emerged.
Exports are far below the highs above 2,2 million bpd reached in 2011 and the May figure is set to fall beneath the exports of Angola, which is usually the continent’s second largest exporter.
Angolan exports in May were set to be 1,67 million bpd, a provisional shipping list indicated.
Production of the Forcados grade has been hit by underwater pipeline leakage due to oil theft which led operator Shell to declare force majeure on the grade this week.
The problems affecting Forcados are the latest in a string of theft-related outages at major Nigerian grades, with Bonny Light production severely affected for much of last year.
Planned exports in April were initially seen at 1,73 million bpd, but were revised up to 1,86 million bpd after additional Bonny Light cargoes were added.
Traders said that it was likely that there would be no exports of Forcados for May, although should the pipeline be fixed soon there could yet be a small volume of this grade, which could push shipments above Angolan levels.
Royal Dutch Shell lost nearly $1bn through theft and various disruptions to its Nigerian oil and liquified natural gas (LNG) operations in 2013 and said that rampant oil theft costs the country even more.
The Anglo Dutch company, updating investors on its strategy, also said that proposed Nigerian legislation had curbed investment, hindering production, while security is a daily challenge and oil theft “very material”.
Nigeria is important for Shell because the African country provides almost 10 percent of the company’s output and is seen as a source of future growth. In its annual report, also published yesterday, Shell said that some risks of working in Nigeria had worsened.
The Nigerian petroleum industry bill (PIB), a piece of legislation several years in the making, has not passed but it could change the terms for foreign oil companies in the country.
“There are at least three to four different versions of it and most of them have been unhelpful to supporting future investments in the country,” Simon Henry, Shell’s chief financial officer, said on a conference call.
“Therefore the industry at large has taken almost no significant investment decision in that six, seven-year period. So the country’s 4 millon barrel-a-day target has effectively become actual production of less than 2 million bpd.”
Nigeria produced about 1,9 million bpd in February, according to OPEC figures.
Oil theft is often associated with criminals who tap crude from pipelines for local refining. Stolen oil also leaves the country in tankers.
“The theft is very material,” Henry said. “Figures have been quoted up to a billion dollars a month being stolen from the government, in effect, and that figure is probably accurate.”
Shell’s Nigerian oil and gas output averaged 265 000 barrels of oil equivalent per day in 2013, down 100 000 bpd from 2012 and equal to about 8 percent of total supply of 3,2 million bpd.
The company, which is in the process of selling some onshore Nigerian oil blocks, still views Nigeria as a source of longer-term growth and Henry said Shell would continue to invest in gas and deepwater projects.- Fin24.
Sidumisile Mabena
Online Reporter