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CRUDE EXPORTS: Nigeria faces lowest output since 1970

CRUDE EXPORTS: Nigeria faces lowest output since 1970

U.S. oil major Exxon Mobil has suspended exports from Nigeria’s top crude stream, adding to economic strains from unrest and violence that have cut production to its lowest in decades. Exxon Mobil confirmed yesterday that it had declared a force majeure — a suspension of deliveries because of events beyond its control — on Nigeria’s Qua Iboe crude oil grade BFO-QUA, and that a portion of production had been curtailed. Buhari The producer said on Thursday it had reduced output after a drilling rig damaged a pipeline. Brent crude has surged to $47 per barrel from $27 in January, in part because of production problems in Africa’s former largest producer as well as a decline in U.S. output. Oil prices have jumped around 20 percent so far this quarter, their biggest such rise since 2011. Exxon Mobil declared a force majeure on the country’s largest export grade Qua Iboe BFO-QUA, traders said yesterday.

The outage adds to production problems at two of the other largest crude streams, Bonny Light and Forcados, which have already taken Nigeria’s output to a 22-year low. A Geneva-based trader said that output of Qua Iboe had stopped completely and that it was unclear when it would re-start. Nigeria’s oil production has fallen to 1.65 million barrels per day (bpd) due to militant attacks, Finance Minister Kemi Adeosun said, from 2.2 million bpd. If outages at Qua Iboe and other streams are prolonged, Nigerian output could fall to around 1.2 million barrels per day, according to Reuters calculations. This would be the lowest output since 1970, according to BP’s statistical review. Up until this year Nigeria had been Africa’s largest crude exporter with its economy heavily reliant on oil.

However rampant oil theft and corruption has kept production well below its capacity of above 2 million barrels per day. As a result, Angola has overtaken Nigeria as the continent’s largest producer since March, according to OPEC figures. Nigeria was due to export 337,000 barrels per day (bpd) in May, according to initial loading programmes released in March. Royal Dutch Shell’s local operation also shut a major pipeline earlier this week and declared force majeure on Bonny Light crude exports on Wednesday. An attack in February on a Shell oil pipeline also shut the 250,000 barrel-a-day Forcados export terminal.

Last week, Chevron said its platform in the Delta was attacked by militants. Nigeria hopes U.S. will sell it aircraft to fight Boko Haram Nigeria hopes the United States will sell to it an aircraft to fight Boko Haram militants, saying its human rights record had improved sufficiently for a blockade on arms deals to be lifted, the foreign minister said on Friday. U.S. officials told Reuters this month Washington wants to sell up to 12 A-29 Super Tucano light attack aircraft to Nigeria in recognition of President Muhammadu Buhari’s reform of the country’s army. Congress needs to approve the deal. Under Buhari’s predecessor Goodluck Jonathan, the United States had blocked arms sales and ended training of Nigerian troops partly over human rights concerns such as treatment of captured insurgents.

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