The government hopes to raise production to 2.5mn b/d by 2020, but a renewed threat of rebel attacks could scupper its plans
Nigeria has drawn up plans to boost oil production, but realities on the ground may frustrate its targets.
The government wants to increase output to 2.2mn b/d this year and to 2.5mn b/d by 2020. Production stood at 1.69mn b/d last month, 40,000 b/d higher than in December, Argus estimates. The country's budget and national planning ministry came up with the goals as part of an economic recovery and growth plan. The programme was formulated in line with Nigeria's national budget for 2017, which is based on a $42.50/bl oil price assumption.
The upstream targets are ambitious. A campaign of sabotage by rebel group the Niger Delta Avengers (NDA) hampered output last year, with oil minister Emmanuel Ibe Kachikwu estimating that 1mn b/d was shut in at the height of the attacks. He has outlined a new 20-point plan that is intended to reduce the threat of rebel activity. This is the latest in a long line of government initiatives designed to counter the problem. Attacks on oil infrastructure cost Abuja $50bn-100bn in lost revenue last year, Kachikwu says.
The focus of the new drive is greater engagement with communities in the Niger delta and improved co-ordination between various government agencies and the military in the region. Maintaining payments to former rebels under a 2009 presidential amnesty will be crucial to its success.
Nigeria's near-term production outlook has improved in recent months. A threat by the NDA to end a ceasefire has yet to materialise. Italy's Eni lifted an eight-month declaration of force majeure on the 130,000 b/d Brass River crude stream on 29 January, after it conducted repairs on the Ogbaimbiri-Tebidaba pipeline. And production could benefit from the return of around 250,000 b/d of Forcados output, which has been under force majeure for a year.
The longer-term outlook for output growth continues to rest on the long-delayed petroleum industry bill and the renegotiation of production-sharing contracts. Total plans to start up its 200,000 b/d Egina field next year. But a number of other large offshore projects remain on the drawing board, including ExxonMobil's 140,000 b/d Bosi field and Shell's 150,000 b/d Bonga Southwest.
And a potential court case over Eni and Shell's controversial $1.1bn acquisition of offshore block 245 has dented investor confidence. Italy's public prosecutor has requested that the two companies and a number of senior executives be put on trial over alleged bribery payments linked to the 2011 deal. Preliminary hearings will commence on 20 April to allow a judge to decide if there is enough evidence to proceed with a trial. Eni and Shell deny any wrongdoing.
