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Africa shows how hard it’s becoming to pump crude oil

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Africa shows how hard it’s becoming to pump crude oil: Report

The world’s infrastructure to pump crude out of the ground is creaking, and nowhere is that more apparent than off the west coast of . Years of under-investment, theft, sabotage and civil strife have combined with harsh operating conditions to undermine the region’s oil production, sending it into a slump from which it may never recover.

In 2010, west African countries were pumping close to 5.5 million barrels a day of crude and condensate, about 7 per cent of global production. By 2021, that had fallen to little more than 3.5 million barrels a day, and the region’s share of the total had dropped by two percentage points. This year will see levels fall further.

West Africa’s two big producers, Nigeria and Angola, are both struggling with fields in long-term decline. But the problems don’t stop there.

The output cuts agreed by the OPEC+ group of oil producers in 2020 in response to the Covid-19 pandemic appear to have resulted in permanent losses of production capacity for the two west African giants. Neither has been able to restore the output that was shut between April and June 2020, even as their targets began to rise in early 2021.

Production data from Nigeria’s upstream petroleum regulator show crude output dropping below 1 million barrels a day in August and September. That’s barely half the level seen in the first months of 2020 before the OPEC+ cuts. Even when output targets began to rise, Nigeria’s production continued to go in the opposite direction.

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The country will boost output by 500,000 barrels a day by the end of November, according to Nigerian National Petroleum. That’s a tall order and would take production to a level that it has not reached in more than two and a half years. Even if the target is reached, maintaining output at that level looks challenging. Upstream investment onshore and in shallow waters is almost non-existent, while spending in deeper waters will do little more than slow the decline. But an even bigger problem is posed by the lack of security for oil infrastructure. Rampant theft of crude from the pipelines that crisscross the Niger river delta region have forced producers to shut wells. The situation has gotten so bad in recent months that one of the biggest pipelines carrying crude across the region — the 180,000 barrel a day Trans-Niger Pipeline — was forced to shut in June after flows slowed to a trickle. The government is now turning to those who previously sabotaged oil infrastructure to provide protection. It also looks set to require the installation of surveillance equipment that detects losses from pipelines in real time, a demand that will raise the cost of production in the region.

Meanwhile, production is also falling further south in Angola. When the nation joined OPEC in 2007, it was within a whisker of pumping 2 million barrels a day of crude. 15 years on, it is struggling to keep output at half that level. New projects are mostly tapping fields near those already in operation, making use of spare capacity on floating production units as it becomes available to stem the decline in output. But there are no new offshore production hubs under development that will reverse the decline anytime soon.

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Africa shows how hard it's becoming to pump crude oil: Report

Although the region’s two big producers are struggling, the west African oil producers’ club may soon be able to welcome a new member. Angola’s southern neighbor Namibia hopes that recent discoveries by Shell and TotalEnergies SE off its coast will herald long-awaited oil production.

 

Maybe Russia’s self-destruction as a destination for upstream investment will encourage oil majors to look again at prospects off west .

Recent successes in Namibia and across the Atlantic off Guyana — the other flank of the rift that opened between  and South America in the Jurassic Period — may cause a rethink. It can’t come too soon for the oil-dependent economies of Angola and Nigeria.

 

 

 

 

Source: Business-standard.com

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