Top African oil exporters Nigeria and Angola will struggle to boost output to their OPEC quota levels until at least next year as underinvestment and nagging maintenance problems continue to hobble output, sources at their respective oil firms warn.
Their battle mirrors that of several other members of the OPEC+ group who curbed production in the past year to support prices when COVID-19 hit demand, but are now failing to ramp up output to meet soaring global fuel needs as economies recover.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed in July to add 400,000 barrels per day (bpd) to production from August until December 2021, slowly phasing out the unprecedented supply cuts.
However, Nigeria and Angola have underproduced by an average of 276,000 bpd so far this year out of their combined average OPEC quota of 2.83 million bpd according to Refinitiv data. They are likely to remain below quota through the end of the year, according to industry sources and Reuters calculations.
The oil not pumped is worth hundreds of millions of dollars.
Lockdowns aimed at stemming COVID-19 last year hindered the supply of spare parts and prevented maintenance work. Companies battered by a 20-year low in crude prices also postponed major investments.
Kola Karim, chief executive of Nigerian producer Shoreline Natural Resources which has eight producing fields pumping around 50,000 bpd, said the backlog meant it would be one to two quarters before Nigeria could pump at its full capacity.
The maintenance backlog covers everything from servicing wells to replacing valves, pumps and pipeline sections. Companies are also behind on plans to do supplementary drilling to keep production stable. These issues impacted virtually all companies in Nigeria, Karim said.
“So now things are breaking…we’re now facing the music,” he told Reuters, though he added that the country would catch up on production by early 2022 as companies rush maintenance and repairs.
Two sources, one at Nigerian state oil company NNPC and another close to Angolan state oil company Sonangol, confirmed the countries were struggling to raise output.
Spokesmen at NNPC and Nigeria’s oil and finance ministries did not reply to requests for comment.
Oil Minister Timipre Sylva told journalists last week that he expected Nigeria to meet its quota within a month or two, but did not specify how. The government has previously pointed to a recently signed oil overhaul law as key to boosting investment and production.
Angola’s finance ministry told Reuters that it could struggle to meet its target for years.
Follow our socials Whatsapp, Facebook, Instagram, Twitter, and Google News.
