Nigeria’s Oil Rigs Count Slumps 50% in Three Years

The latest Monthly Oil Market Report (MOMR) by Organisation of Petroleum Exporting Countries (OPEC) has revealed that Nigeria’s oil rigs count fell from 16 to eight between 2019 and 2022, underscoring the magnitude of challenges the country has faced in producing its OPEC monthly allocation.

The MOMR showed that while the average rigs count was 16 in 2019, it fell to 11 to 2020, and then further to seven in 2021.

In the first quarter of 2022, the count was eight, it was 11 in the second quarter of the year, and again fell to nine in the third quarter this year, according to the OPEC data.

In September this year, the total number of rigs were seven and although it rose by one, to eight in October, it was still half the number Nigeria had in 2019 when the industry hadn’t been hobbled by production issues. OPEC had not released November figures for rigs at the time of going to press.

During the period, Algeria’s also fell from 45 to 32, Angola’s grew from four to nine, while Libya’s rigs count slumped from 14 to six.

For world rigs count, outside OPEC, the United States rigs fell from 944 to 768 in October, while the UK’s fell from 22 to 15. The global West led by America has been shutting down many of their facilities in preparation for the gradual adoption of renewable energy. OPEC rigs count was 394 for the period even as non-OPEC was pegged at 1,985.

The rigs data for October was released amid a marginal increase of 77,000 barrels per day oil production, during the month and a further rise to 171,000 barrels per day in November.

But the Nigerian National Petroleum Company Limited (NNPC) has put current production at 1.6 million bpd, although traditionally OPEC and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) release production figures.

The production was still about 700,000 barrels per day less than Nigeria’s quota for the month, which in the last few months has been pegged at 1.8 bpd on the average. In total, Nigeria’s output was 1.186 million bpd in November.

The figure, the OPEC report indicated, were far less than what they were in 2020, regarded as the Covid-19 year, when Nigeria produced 1.493 million bpd and in 2021, when it averaged 1.323 million bpd.

The rise in the oil rigs in October was however about 14.2 per cent when put side by side the September figure, which was pegged at a low of seven.

In recent times, the country’s active rigs have progressively decreased, but was made worse after Nigeria began shutting down many of its offshore platforms as oil prices took a downward slope and the producers’ group embarked on production curbs to stabilise the market in 2020, following the upsurge of the Covid-19 pandemic.

Furthermore, there has also been massive underinvestment in the sector, leading to depleting oil rigs.

Despite the remarkable recovery in global crude oil demand, Nigeria had been unable to ramp up production, following massive theft of the resource in the Niger Delta as well as shutdowns due to frequent equipment failure.

In the oil and gas industry, the rig count is a major index for measuring activities in the upstream sector.

While for instance, 26 rigs were in operation, on both onshore and offshore terrains, in 1997, Nigeria as at January this year had just about 12 active oil rigs, with about half of them not even in use.

Last week, the Nigeria Extractive Industries Transparency Initiative (NEITI) revealed that in the period spanning between 2009 and 2020, Nigeria lost as much as 619.7 million barrels of crude oil valued at N16.25 trillion to oil theft.

The losses were from theft and sabotage, based on information and data provided by an average of eight companies covered by NEITI process over the years, the organisation said.

A breakdown of the losses, it said, shows that in 2009 when NEITI commenced reporting of crude oil theft, Nigeria lost 69.49 million barrels valued at $4.31 billion.

It added that the figures for 2010, 2011 and 2012 revealed that 28.31 million, 38.61 million and 51.58 million barrels which were valued at $2.29 billion, $4.39 billion and $5.82 billion were lost respectively.

According to NEITI, its oil and gas industry reports for 2013 to 2020 also showed that the losses to crude oil theft did not abate as 78.30 million barrels valued at $8.55 billion were lost in 2013 alone.