Nigeria’s oil and condensate production for 2018 is expected to reach 2.2 million b/d, said a Barclays research note. Nigeria’s production recovered to 2 million b/d in 2017 after falling to 1.5 million b/d in August 2016.
Oil production disruptions during 2016 stemmed from militant insurgencies, but production levels have recovered since an August 2016 ceasefire agreement although the nation remains subject to near-term supply disruptions, said Rita Babihuga-Nsanze of Barclays in London.
Nigeria’s government envisions 2.3 million b/d production for 2018. Barclays noted the country is approaching a February 2019 general election, which means officials likely will “make every effort to meet the terms of the ceasefire agreement in order to protect the economic recovery.”
But Nigeria’s production remains vulnerable to near-term supply disruptions if militant sabotage activities were to resume, Babihuga-Nsanze said.
In November 2017 and January 2018, the Niger Delta Avengers threatened to resume attacks on international oil companies’ deepwater operations in the Niger Delta, accusing the government of delaying payments and the Nigerian military of targeting Delta communities.
But as of late February, militants had yet to act on these threats, Barclays said in a Blue Drum note.
“A resumption in hostilities would be highly detrimental to Nigeria’s economic recovery,” Babihuga-Nsanze noted.
Meanwhile future production could be affected by upcoming oil lease expirations. A total of 28 onshore oil leases are due to expire in 2019, which sets the stage for lease renewal negotiations.
“There is a risk that political change could disrupt the process,” Babihuga-Nsanze said.
Contact Paula Dittrick at [email protected].