‘Nigeria, Angola lack capacity to increase oil output’

It might take Nigeria and Angola up to six months to put in place adequate measures required to increase oil output, this was the view of some experts, who spoke with Reuters.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) had 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.

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.