Hector Igbikiowubo With Agency Report
21 March 2006
INCREASING volumes of crude oil production from the deepwater Bonga oil field which came on stream in December last year has provided a much needed financial reprieve following loss in revenue from shut in crude oil production.
Meanwhile, a recovery in Iraqi volumes boosted OPEC production by 240,000 barrels per day (b/d) to 29.92 million b/d in February from 29.68 million b/d in January, a survey of OPEC and oil industry officials has shown.
Although continuing ethnic unrest in the Niger Delta continued to take its toll on Nigerian supply, although rising output from the deepwater Bonga field helped to offset production losses.
While speaking with Vanguard last week in Abuja at the just concluded offshore West Africa conference, Dr. Edmund Daukoru, the Minister of State for Petroleum, and OPEC President confirmed that up to 556,000 barrels were currently shut in due to the crises in the Niger Delta.
He explained that much of what has been shut in was due safety and precautionary measures and not necessarily damaged infrastructure, adding that 100,000 barrels can be restored immediately to boost production.
In January, output from Bonga had exceeded 120,000 barrels per day and it is expected to peak at 225,000 barrels per day with positive implications for Nigeria's total output and exports.
Efforts to get the current output of the Bonga oil field proved abortive at the time of filling this report, while an official hinted that plans for the official commissioning of the field earlier scheduled for last Friday had to be put off again because President Olusegun Obasanjo had indicated he could not make it to the event.
Also, at the time of filling this report there was no word from the company or government on the new date for the official commissioning of the Bonga production facility.
Last month, exports from Nigeria amounted to 2.370 million barrels per day against 2.400 million barrels per day in January and 2.42 million barrels per day in the month of December 2005 and another 2.450 million barrels per day in November 2005.
Although Nigeria's OPEC quota stands at 2.306 million barrels per day, member nations of the cartel have been allowed to produce at their peak to stem rising oil prices in the international market.
Excluding Iraq, however, output from the ten members with quotas dipped by 20,000 b/d to 28.13 million b/d over the month. Production increases from four countries-Iraq, Libya, Saudi Arabia and the UAE-totaling 310,000 b/d were partially offset by reductions of 40,000 b/d and 30,000 b/d from Iran and Nigeria.
The biggest single increase came from Iraq, whose overall supply rose to 1.79 million b/d from 1.53 million b/d in January.
"Iraq seems to be the new swing producer in OPEC, but this is not necessarily a good thing for consumers," said John Kingston, global director of oil at Platts.
"While Iraq's geological upside is enormous, the infrastructure of the industry remains threadbare, and it is obviously an easy target for the insurgency. At this point, it's difficult to imagine a jump of several hundred thousand barrels per day of output, but it's not that difficult to imagine a decline of that magnitude."
The latest estimates show the OPEC-10 producing just 130,000 b/d in excess of their 28 million b/d output ceiling, which the group agreed to maintain at talks in Vienna last week. A glance at individual production levels, however, shows that while several members are producing comfortably above their quotas, Indonesia, Iran and Venezuela are under producing their official limits to the combined tune of around 1.4 million b/d.
Indonesia, whose crude production is in decline, and Venezuela, whose oil industry has not recovered fully after the oil workers' strike in the winter of 2002-2003, have been under-producing for some time.
Iran, with a high depletion rate in its producing fields and experiencing great difficultly in selling Soroush/Nowrouz crude, has not managed to produce its 4.11 million b/d quota since it came into effect in July 2005.
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