Nigeria’s oil sector has long produced uncertainty in prodigious quantities, but the past few days may mark a record. Depending on who you listen to, crude output in Africa’s biggest producer has slipped dramatically.
The latest in a string of worrisome pronouncements came on Wednesday, when Lamido Sanusi, the respected new governor of the central bank, was quoted as telling an audience in Kenya that production had fallen to about 1m barrels of oil a day.
If the governor being quoted correctly (the central bank has been reluctant to issue a copy of his speech), something pretty monumental has happened since the first three months of this year, when the bank’s own official figure was an average of 1.68m b/d of oil, gas and condensates.
Sanusi’s remarks tally with what Levi Ajuonuma, spokesman for the state-owned Nigerian National Petroleum Corporation, told the FT in Abuja last month: namely that the industry was reeling from years of attacks on its installations in the Niger Delta, home to about 90 per cent of the country’s petroleum.
“We are at around 800,000 [to] 1m [barrels per day],” says Ajuonuma. Another senior government official echoed that estimate, as did Bismarck Rewane, a well-connected investment banker, who put production at between 800,000 and 1.1m b/d.
The consequences of such a slide could be dire. “Anything below 1m derails [Nigeria's] spending programmes and our response to the recession,” says Rewane.
The government has budgeted for 2.3m b/d this year. Nigeria’s income from oil – which accounts for more than 90 per cent of export earnings – halved in the first three months of this year compared with the previous quarter, falling to $4.9bn from $9.86bn, according to the national statistics bureau.
But it is not quite that simple. For a start, no one has been able to explain which fields or pipelines have stopped functioning in the interim to account for the dive in output. A couple of producers – Total and Addax – have declared force majeure on some shipments due to technical problems but these barely make up 100,000 b/d.
On Wednesday afternoon, a Nigerian oil executive speaking in private snorted at the idea that production could be so low, suggesting 1.6m b/d was more accurate. Stewart Williams, principal sub-Saharan Africa analyst at energy consultancy Wood Mackenzie, puts production at 1.5m b/d to 1.6m b/d.
Why the discrepancy? Analysts with a cynical streak (easily acquired in a country so riddled with corruption and electoral violence) remark that it is in the state’s interest to create a sense of crisis as it tries to force through a comprehensive reform of the oil sector.
That the bill has merits – including the promise of greater transparency and restructuring the hopelessly ineffective state company – misses the point. Oil companies and the delta’s influential governors, who stand to get less cash as a result, are united in opposition to it.
The oil companies, too, are making data scarce at the moment. Like the government, they may have an interest in uncertainty as the negotiations continue.
What is clear amid the murk is that next year’s target of 4m b/d looks, for now at least, like a pipe dream. If the estimates are even close to accurate, Nigeria has once again lost its crown as sub-Saharan Africa’s biggest producer to Angola – another feat for a country whose story is a perfect illustration of how resources can be a curse.