Nigeria Oil Output Seen Stuck at Lows as New Militants Emerge

  • Rise in number of militant factions complicates peace: BMI
  • Nigeria saw biggest decline of all OPEC members in July: IEA

Nigeria’s crude oil production, depressed to near 30-year lows as OPEC peers hit record highs, may be slow to recover as the government faces a proliferation of militant groups staging attacks on energy infrastructure at the heart of its resources.

Dethroned earlier this year as the biggest producer on the African continent, Nigerian oil output declined 40,000 barrels a day in July to 1.52 million barrels, the biggest decline among OPEC members for the month, according to the International Energy Agency. Militant attacks picked up after a brief pause in June, further restricting production.

While Nigeria’s government has resumed payments to former militants and is trying to establish talks in order to bring an end to the attacks, no apparent progress has been made with the Niger Delta Avengers, the group that has claimed the majority of pipeline bombings. And the number of such groups is increasing, BMI Research said Thursday in a note.

“The growing number of militant groups in the Niger Delta makes the chances of a settlement between the government and militants increasingly slim, compounding our view that oil production will underperform its potential,” the analysts said. BMI forecasts average production for 2016 of 1.7 million barrels a day.

Output has fallen to 1.4 million barrels a day, Minister of State for Petroleum Resources Emmanuel Kachikwu said earlier this month. Supplies from Qua Iboe, the country’s biggest crude grade, and Forcados are likely to remain disrupted through August, the IEA said. Production is down 250,000 barrels a day from a year ago, it said.

More Rebels

A new rebel group, the Niger Delta Greenland Justice Mandate, on Wednesday blew up a crude-oil pipeline operated by a unit of Nigerian National Petroleum Corp. and Shoreline Natural Resources Ltd., the Lagos-based Punch newspaper reported, citing Aldo Agbalaja, a spokesman for the militants.

The Reformed Niger Delta Avengers, Joint Niger Delta Liberation Force, The Niger Delta Justice Defense Group, The Niger Delta Revolutionary Crusaders and The Ultimate Warriors of Niger Delta have also threatened or claimed attacks while another three groups have agreed to government talks, according to BMI.

“With the chances of a universally accepted settlement looking slim, it is likely that sabotage operations in the delta will continue.”