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Nigeria Increases Oil Output Amid Niger Delta Surveillance

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In the struggle against rampant oil theft and pipeline sabotage plaguing the Niger Delta, recent trends signal a promising uptick in Nigeria’s crude oil production.

For years, oil theft and pipeline vandalism have beleaguered Nigeria, severely undercutting crude production — at times dropping to a dire 900,000 barrels per day as of last September. This sustained crisis not only sapped the economy but spurred international oil companies, present for over six decades, to commence withdrawal from the country.

Despite the enduring challenges, Nigeria now sees potential relief, buoyed by increased oil output, offering a boost to national revenue.

The existing security measures proved ineffective against the rampant criminal disruptions, prompting the federal government to explore alternative strategies.

Historically, multiple security layers and specialized units, despite their diverse appellations, failed to staunch the bleeding of Nigeria’s oil resources.

The ramifications extended far beyond fiscal deficits; they affected government assurances, foreign exchange sources, and environmental health, while other oil-rich nations enjoyed burgeoning reserves and oil companies reaped profits.

Amid such bleak circumstances, news of the Nigerian National Petroleum Company Limited (NNPC) fostering agreements for pipeline and asset protection was met with skepticism and hope.

One year on, the strategy shows signs of success, with Nigeria marking its most significant crude production in 21 months.

The Nigerian National Petroleum Corporation’s move to sign local security contracts now appears to bear fruit, with a discernible dip in illegal activities and a resultant boost in production.

After a history of erratic outputs, the last three months have seen steady and promising production figures.

OPEC data from August reveals that output increases from Nigeria, among other countries, contributed to a rise in overall production, with Nigeria’s crude output climbing from 1.171 to 1.269 million barrels per day, per secondary sources.

September witnessed further growth, with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reporting an increase of approximately 165,429 bpd.

Despite the OPEC-imposed cap of 1.74 million barrels per day, Nigeria’s self-reported production for September reached a new zenith since January 2022—1.34 million bpd.

The Forcados terminal, pivotal in this turnaround, recommenced operations after suspension due to a leak. Managed by Shell Petroleum Development Company Limited (SPDC), its production surged in September, alongside a slight uptick from the Yoho oil field.

Including condensates, Nigeria’s total production for September was an impressive 1.57 million bpd.

According to a report by This Day Live, the uptrend continued into October, with preliminary data pointing to another production increase, further boosting OPEC’s monthly output.

This surge, if maintained, could alleviate Nigeria’s reliance on external borrowing and stabilize the foreign exchange market, given that crude exports form the backbone of the country’s foreign earnings.

The anticipated Dangote refinery’s operations would also benefit from the increased availability of local crude.

Investors are noticing as Nigeria’s federal government secures substantial investment pledges from international and independent oil operators to enhance crude production over the next year.

Mrs. Olu Verheijen, Special Adviser to the President on Energy, highlighted a presidential initiative’s pivotal role in fostering these investment commitments.

These discussions anticipate a substantial $55.2 billion in projected investments by 2030, with a substantial $13.5 billion earmarked for the coming year.

Plans are afoot to reach a daily barrel goal of 2.1 million by December 2024, which aligns with President Bola Tinubu’s campaign promises.

Renewal processes for existing contracts are underway and urgently stressed to maintain momentum and preserve the advances made.

Community leaders and advisors, such as Chief Gritson Omatsuli and Sir Matthew Itsekure, advocate for the expedited renewal of pipeline surveillance contracts. They argue these are crucial for thwarting oil theft and sustaining the upward trajectory in crude production.

As Nigeria confronts its challenges head-on, the cautious optimism in the Niger Delta offers a beacon for a more stable and prosperous future in the oil sector.

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