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Nigerian oil output plunges to 20-year low as attacks mount
[LAGOS] Nigeria is suffering a worsening bout of oil disruption that has pushed production to the lowest in 20 years, as attacks against facilities in the energy-rich but impoverished nation increase in number and audacity.
Chevron Corp shut down about 90,000 barrels a day of output following an attack on a joint-venture offshore platform that serves as a gathering point for production from several fields. Even before that strike on Wednesday night, Nigerian oil production had fallen below 1.7 million barrels a day for the first time since 1994, according to data compiled by Bloomberg.
"This is some very, very sophisticated brazen attack," said Dolapo Oni, the Lagos-based head of energy research at Ecobank Transnational Inc. "It is a resurgence of militancy. These guys don't seem to be after money. They just want to frustrate the government."
The fresh round of attacks come after President Muhammadu Buhari vowed to stamp out corruption and oil theft. They echo a campaign waged by the self-proclaimed Movement for the Emancipation of the Niger Delta between 2006 and 2009, which cost the Nigerian government billions of dollars of lost oil revenue.
That violence abated after thousands of fighters accepted an amnesty from late-President Umaru Musa Yar'Adua and disarmed, in exchange for monthly payments from the government in some cases.
Chevron said it shut down its Okan offshore facility after it was "breached by unknown persons" and had sent "resources to respond to a resulting spill." The US company on Friday said that 35,000 barrels a day of its own net production was affected. Okan, which feeds crude and gas into Escravos, one of the country's largest export facilities, is jointly owned by Chevron, with a 40 per cent stake, and state-owned Nigeria National Petroleum Corp, which has the rest, according to NNPC's website.
A group calling itself the Niger Delta Avengers said on its website that it was responsible for the attack. The authenticity of the claim could not be verified by Bloomberg News.
The Nigerian government is struggling to contain the economic damage of the slump in energy prices and separate attacks in the north of the country by the Boko Haram Islamist insurgency. The country's foreign reserves have fallen to less than US$27 billion, the lowest since 2005.
The International Monetary Fund expects the economy to expand 2.3 per cent this year, the weakest growth since 1999.
"Lower oil prices have meant that the poorer oil-producing countries don't have enough money to pay for social services," said Ehsan Ul-Haq, senior oil analyst at KBC Process Technology Ltd.
"Protests are increasing as a result."
In February, Royal Dutch Shell Plc declared force majeure - a legal clause that allows it to stop shipments without breaching contracts - after an attack on a pipeline feeding the Forcados terminal, which typically exports about 200,000 barrels a day.
The International Energy Agency estimated last month that Nigeria could lose an estimated US$1 billion in revenue by May, when it expects repairs on Forcados to be completed. The terminal may not restart until June, Nigerian Oil Minister Emmanuel Kachikwu said April 20.
Major oil companies like Shell, Chevron, Total SA, Eni SpA and ConocoPhillips, which for five decades dominated the Nigerian oil industry, have been selling onshore and shallow water oil fields in the Niger delta to local companies, concentrating their investments in deep-water fields outside the reach of militants.
"If prices remain low, we will see more and more problems including these kind of sabotage attacks," said Mr Ul-Haq.