Nigeria’s Kachikwu Says Oil Flow ‘Dismal’ on Steady Attacks

  • Output seen 23% lower than in 2015 due to militant activity
  • OPEC members to seek better crude prices at Algiers meeting

Nigeria will pump no more than 1.5 million barrels a day of oil this year as sustained attacks by militants have damaged infrastructure including its biggest export terminal, said the country’s oil minister.

“Our average for the year will obviously be dismal,” Minister of State for Petroleum Emmanuel Kachikwu said in an interview Friday. “I would imagine that we would probably end the year at about 1.5 million barrels a day at best.”

Damage to a pipeline connected to Nigeria’s Qua Iboe export terminal, the country’s largest, will take four months to fix, Kachikwu said. Royal Dutch Shell Plc may be able to resume shipments from the damaged Forcados terminal in mid-September, he said. Realizing the minister’s estimate would bring the OPEC member’s output down 23 percent from 1.94 million barrels a day last year, according to data compiled by Bloomberg.

Nigeria has resumed payments to former militants and is attempting to facilitate talks with groups that have sabotaged export and production infrastructure in the oil-rich Niger delta. No apparent progress has been made with the group that has claimed the majority of pipeline bombings, the Niger Delta Avengers, and the number of rebel groups is increasing.

“We have a lot more groups now we need to bring together to have peace,” Kachikwu said. “What I am asking for largely is a 60-day cease-fire from them so that we can have time to dialogue and I’m also elevating dialogue,” to include kings and traditional rulers, he said.

Following steady attacks since the beginning of the year, the Forcados, Brass River and Bonny Light terminals have seen declarations of force majeure, a legal term that allows companies to walk away from export commitments. The Escravos terminal has delayed shipments after attacks on Chevron Corp. facilities and Exxon is considering its options after damage to Qua Iboe, where production averaged 400,000 barrels a day.

Shell declared force majeure on Bonny Light shipments again Friday because of the shutdown of the Nembe Creek Trunk Line after a leak, the company said.

‘Difficult Times’

The damage to the country’s main export industry has reduced revenue and is cutting into capital funding, Kachikwu said. In May, the minister said the nation’s budget is calculated based on 2.2 million barrels of oil output a day. Nigeria is considering making up the budget shortfall through the sale of concessions and licenses, along with a strategic sale of assets, he said Friday.

Members of the Organization of Petroleum Exporting Countries will meet in Algiers next month to seek better oil prices, Kachikwu said. “We are all going through difficult times: prices issues, discount wars, force majeure situations in a lot of countries, the rejuvenation of the shale producers, and everything that can be thrown into this potpourri."

The group will also focus on engagement with major non-OPEC members including Russia and Mexico, he said.

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