BREXIT CAUSES ECONOMIC WORRIES FOR NIGERIA

Concerns grow over Nigeria’s dwindling oil wells, active rigs

Industrialists list implications of Brexit on economy

The fortunes of what still remains the mainstay of the Nigerian economy – oil and gas – are plummeting, indicating there is no silver lining in the clouds for now.

This has manifested in the dwindling number of producing wells which has dropped from 2,010 in 2014 to 1,947 by December 2015.

Also, according to Statistical Bulletin of Organisation of Petroleum Exporting Countries (OPEC), the number of active rigs in the Niger Delta has dropped from 59, which it recorded in 2013, to 29.

The numbers of completed wells in Nigeria’s oil sector has also dropped from 141 to 116.

However, Brent crude futures rose by 2.1 per cent to $48.16 per barrel while West Texas Intermediate (WTI) rose by 2.3 per cent to $47.43 a barrel yesterday, as investors took advantage of a two-day slide in crude triggered by Britain’s vote to leave the European Union.

Meanwhile, the Lagos Chamber of Commerce and Industry (LCCI) has spoken on the likely impact of Britain’s exit (Brexit) from the European Union (EU) on the Nigerian economy.

The number of active rigs in the United States (U.S.) is 711 just as Washington which used to depend so much on crude oil import from Nigeria is now concentrating on exploitation of its shale oil and gas.

The Nigerian National Petroleum Corporation (NNPC) report on producing wells noted that Obe Oil Field has not produced a single barrel of crude oil since January last year, after the initial 7,000 bpd output it achieved few years ago.

With reserves of approximately 15 million barrels, interest in the Obe Field was sold in 2004, but Allied Energy still retains an option to participate in deep water development.

Also, the Ukpokiti Field, comprising five oil wells and two injector wells, namely UKP 4R, 6R, 1R and 4B, 1B, has not produced crude oil since December after recording about 34,586 barrels in November, 2015.

Nigerian Petroleum Development Company (NPDC) Joint Ventures also recorded a zero barrel production from Abura, Oredo, Oziengbe, Opuma oil fields in March even as production from Oben Amukpe Oil Field has also significantly dropped from the 435,860 it recorded in the previous month to 51,708 barrels in March.

This led to the reduction in crude oil production from an average of 63,925 barrels per day it recorded in the month of February to 33.269 barrels per day in March.

According to NNPC, apart from the non-producing wells, Bonga field’s production dropped from the 5,502,444 barrels it recorded in February to 2,843,632 in March.

Production from Abo field has also declined from the 727,819 barrels it achieved in February to 640,633 barrels. EA crude also dropped from 1,013,234 barrels to 964,415.

NNPC also disclosed in its March production report that a total of 57.43 million barrels of crude oil and condensate were produced in the month of March 2016 representing an average daily production of 1.85 million barrels.

This, it said, represents a decrease of 3.10 per cent compared to February 2016 performance.

According to the NNPC, recent upsurge in vandalism has negatively impacted on the Nigerian crude oil production output, losing its African top crude oil producer to Angola.

It disclosed that about 380,000bopd remained shut-in due to vandalism of the 48 sub-sea export line on February 15, 2016.

“Hence, all March cargoes were deferred until the repair is completed. Also, the nation has lost over 1,500 megawatts of power supply to the damage as gas supply from Forcados, which is Nigeria’s major artery, accounts for 40 to 50 per cent production. Incessant pipeline vandalism poses the greatest threat to the industry,” the corporation said.

Dwelling on the impact of Brexit on the Nigerian economy, the Director-General, LCCI, Muda Yusuf, said the outcome of the referendum has triggered some measure of uncertainty and anxiety in the global economy.

According to him, the unfolding scenario may have some adverse implications for remittances to Nigerians from the UK. “This will happen from the perspectives of tougher immigration regulations and enforcement as well as the likely slowdown of the British economy.

“On the whole, the impact of Brexit on the Nigerian economy is unlikely to be profound. Besides, negotiations will still take the next two years. Most of the current responses are driven by uncertainties and expectations which will fizzle out in the not too distant future,” he added.