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Africa oil + gas report

Nnpc’S 1.8Million: How Many Lies Make A Truth?By the Editorial Board of Africa Oil+Gas Report Two weeks after it made a stunning claim that Nigeria’s crude oil and condensate production had soared to 1.8Million barrels per day (1.8MMBPD), NNPC Ltd was struggling to explain why the claim was not a lie. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which is the custodian of industry data, had posted, rather belatedly, the country’s October 2024 figures as Crude Oil: 1.33Million BOPD; Condensate: 204,816BPD; Crude Oil+ Condensate: 1.538MMBPD. That publication, on November 23, 2024, pushed the NNPC on the back foot, with its spokesman trying to justify its CEO’s declaration of a figure 272,000BPD above the true national output for the month. The disparity, the company’s statement said, arose from “ the period of coverage in the reports – whereas the NNPC Limited’s figure was the peak production for October 2024, the NUPRC’s figure was the average production for September 2024”. But that line was also not true: NUPRC’s published production figure for September 2024 was: Crude Oil: 1.324MMBOPD; Condensate 219,997BPD, with Crude +Condensate output amounting to 1.544MMBPD. In oilfield operations, there are days in which spikes are experienced in output which, over the course of a month, are calculated with other relatively normal output data and averaged. It is for the reason, of not wanting to create confusion in the mind of the public, that production figures are published on a monthly basis and expressed in terms of average daily output. October 2024 was one of the months in which Nigerian operators struggled most with crude evacuation challenges in the western Niger Delta, so we doubt that NNPC will be comfortable, if challenged to a debate to prove that 1.8MMBOPD was ever reached in any single day in that month. The Keremor Axis of the Trans Forcados Pipeline went offline on October 3, 2024 and stayed down for the next 28 days. In the event, most of the companies who inject their crudes into the pipeline (NPDC, NDWestern, Seplat, First Hydrocarbon, Shoreline, Pillar Oil, Platform Petroleum and SPDC) had far lower output than they normally did at optimum conditions. Expectedly, the receipts at the Forcados terminal for October 2024 declined by 70,919BPD of Crude and Condensate (to 164,309BPD), compared with the 235,228.7BPD received at the terminal in September 2024. That huge shortfall could have led to much lower output than the 1.538MMBPD reported as the overall crude and condensate outout for the country in October 2024, but for the increase in output in other parts of the Niger Delta, most notably the assets operated by Mobil Producing Nigeria. Receipts at the Qua Iboe and Yoho Terminals combined, stepped up by 49,914BPD to 162,347BPD (in October 2024), from 112,429BPD in September 2024. We have gone to this length, to show that Nigerian hydrocarbon production is an agglomeration of small outputs here and there and is nowhere near a massive flood. Despite the claims of people in charge of petroleum resources, there has been no rising tide. It’s a sobering fact. No matter how you spin it, in the 18 months since Mr. Bola Ahmed Tinubu has assumed power, the highest crude oil and condensate in any month, expressed in daily average, has been 1.644MMBPD in January 2024. The average daily output for the entire 2023 was 1.471MMBPD. In the 10 months of 2024 so far, the year to date average production was 1.522MMBPD. All these data are to the credit of the NUPRC, which dutifully publishes production of crude oil and condensate at various terminals, and (more recently) natural gas, every month. Africa Oil+Gas Report’s monitoring of these figures has indicated to us that since January 2022 (the beginning of NUPRC’s first full year as a regulator) Nigerian crude oil and condensate output has trended more between 1..4 and 1.5MMBPD than anywhere near 1.7MMBPD . The reality of field operations led us to express our misgivings about the estimation of 1.78MMBPD crude and condensate production in the 2024 Nigerian budget But why does the NNPC have a predilection for quoting data that is consistently wrong?, Perhaps the state hydrocarbon company, who is no longer the be-all and end-all that it was before the enactment of the Petroleum Industry Act in 2021, just wants to insist on its continued relevance? At a lighthearted evening of banter, where an association of technical professionals feted him in early May 2024, the NNPC’s Group CEO announced that crude and condensate production for that month was north of 1.6MMBPD. When the NUPRC posted the data for the month weeks later, it turned out that the country had averaged 1.46MMBPD in that period. Indeed, Nigeria hasn’t touched 1.55MMBPD since then and yet, by November 3, 2024, the same NNPC chieftain was addressing a press conference, in the presence of the Minister of state for Petroleum Resources (Oil), grandly announcing that the country was producing 1.8MMBPD!!! And why do the Nigerian media appear to support this Trumpian tendency? At training for energy journalists organized by Dangote Industries in June 2024, the question come up: Should the Nigerian media ignore NNPC’s routine announcement of crude oil and condensate production figures since they are always wrong? The response from the room (and these were some of the country’s elite energy reporters) was unanimous: “The media cannot ignore to report any claim about Nigerian hydrocarbon production made by the Group CEO of the NNPC”. That sounded like:” if the NNPC cannot rein in itself about lying about crude oil production, no one would”. The volume of crude and condensate produced in Nigerian fields has real life consequences for the Nigerian economy. It determines largely the size of the Federal budget, it is the key factor in allocation of payments to state governments from the Federation purse; which in turn speaks to commitments to infrastructure provisions, payments of salaries to civil servants, running the state bureaucracy, etc. “Crude production and working refineries are the two clearest criteria of assessing NNPC’s performance in the general public”, many have argued. The NNPC’s declaration of establishment of a so called “war room”, to spearhead increase in production was announced at the Nigerian Oil &Gas (NOG)Conference in Abuja in early July 2024, in response to a statement by the Chairman of the country’s Independent Petroleum Producers Group (IPPG), who said: “Nigeria must act fast and hasten the pace of recovery across the entire industry, even if it means Mr. President declaring a state of emergency in the oil and gas sector!”. The NNPC picked up the gauntlet and by the end of the panel session in which the IPPG and NNPC featured that afternoon, the state hydrocarbon company had settled on the idea of a “war room” ,which was then announced in a statement by its spokespersons later in the day. But talking up the volume does not produce the crude. At Africa Oil+ Gas Report, we pay close attention to daily operational details of the ~40 companies who collectively produce crude oil and gas in Nigeria, and it is clear to us that the “fierce urgency of now” is missing in the quest for unlocking incremental production. It is one thing for the President of the country to issue executive orders to incentivize investment in Non-Associated Gas valourisation, improving Contracting Cycle Timeline, removing Local Content bottlenecks, promoting New Deepwater Developments and returning to natural gas projects licenced under Production Sharing Contracts. These are gestures to medium to long term investments. But there are daily oil field practices that could be attended to and they are not getting the attention. That topic is outside the scope of this intervention. But for now, lying about increased crude oil output will not lead to increased production.

oil-gas

Nov 29, 2024

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