Nigeria’s 2024 Budget: Why the Prognosed 1.78MMBOPD Output Looks Like a Pipe Dream - Africa’s premier report on the oil, gas and energy landscape.

Nigeria’s 2024 Budget: Why the Prognosed 1.78MMBOPD Output Looks Like a Pipe Dream

By the Editorial Board of Africa Oil+Gas Report

The Nigerian government’s assumption of an average output of 1.78Million Barrels of Oil and Condensate per day  (1.78MMBPD) in its 2024 Budget is exceedingly exaggerated, in the opinion of Africa Oil+Gas Report.

The 2023 average daily output (year to date) for crude oil and condensate as of November 31 was 1.46MMBOPD. This means that the government is expecting a 320,000BPD jump in the coming year to meet the budget expectations.

The facts on the ground, from the oil fields to the export terminal, speak to the contrary.

Nigeria’s crude and condensate production dropped from 1.834MMBPD in 2020 to 1.62MMBPD in 2021 and fell to a historic low of 1.38MMBPD in 2022. The year-to-date average for 2023 of 1.46MMBPD (he NUPRC didn’t release the December 2023 report), suggests an 80,000BPD rise year on year, but it is a poor reason to expect a 320,000BPD increase to 1.78MMBPD in 2024.

The fundamentals, especially ageing and dilapidated crude oil evacuation infrastructure, have worsened since 2020. The Nembe Creek Trunk Line which ferries more crude to the Bonny Terminal than any other line, had more significant uptime in 2020 than 2021, but it has stopped working since 2022 and is unlikely to work in 2024. It’s true that the operators who produced through NCTL have found alternative routes to export their crudes, but barging crudes out to sea is far more of a logistical challenge than pipeline transfer and the volumes are smaller. The best that AITEO has done in its seven months of barging operations is 32,000BOPD. Newross has never pumped more than 25,000BOPD in its 12 months of barging. It is this difficulty of aggregating volumes that is driving AITEO to consider construction of a pipeline from Nembe to Brass.   Between AITEO and Newcross, we don’t expect more than 40,000BOPD increase collectively in 2024 over their 2023 production. And that is a very liberal position.

Deepwater output has plunged by more than 20% between 2020 and 2023, as the seven fields in this terrain “wind” down.  With drilling in Bonga and a revamp campaign on Egina, there isn’t likely to be more than 40,000BPD collective contribution from this duo. Usan, Akpo and Agbami will remain, at best, at flat levels

In onshore and shallow water, the fields expected to come on stream in 2024 include Seplat operated ANOH condensate field at 20,000BPD; Sterling Exploration operated Utapate field and other accumulations in OM 13 at 75,000BOPD at the most (and we consider this exaggerated). Okwok and Tubu may add 15,000BPD each, if they make it to commissioning.

The government is also expecting a top up of around 10,000BPD in Anyala Madu in the year.

In a largely mature basin, natural depletion processes work round the clock, mitigating the gains afforded by small increases in output. In November of 2023, Egina and Bonga shed a collective 28,000BPD.

Downtime on pipelines will do its own damage; Elecrest’s output plunged by 8,000BPD in the same month because of down time on the TransForcdos line.

A 320,000BPD addition to Nigerian production, in a year in which the country is not expecting an elephant sized, new field coming on stream, is wildly optimistic.

Waziri Adio, one of the country’s top essayists, had this much to say about the proposed ₦27.5 Trillion 2024 Budget: “Nigeria’s largest, so far in Naira terms, continues the problematic tradition of unrealistic budgeting, anchored on revenue projections that are hardly met and on debts and deficits that always end up bigger than anticipated”.

This piece was published for the benefit of paying subscribers in the December 2023 edition of Africa Oil+Gas Report. It is being repeated her for the public service function.

 

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