Angola is now Africa’s largest oil producer following oil crisis in Nigeria, the worst since 1994.
Nigeria has ceded its status as Africa’s top oil producer to Angola as Nigeria’s crude oil production dropped to 1.677 million barrels per day (mbpd), the lowest in 20 years, following attacks on oil installations and facilities in the country.
A resurgent military group called Niger Delta Avengers have taken it upon themselves to attack and destroy pipelines and major installations in Nigeria’s oil rich Niger-Delta region.
Two weeks ago, Chevron Corp. shut down about 90,000 barrels a day of output after an attack on a joint-venture offshore platform that serves as a gathering point for production from several fields. However, data compiled by Bloomberg, show that even before the attack, oil production had fallen below 1.7 mbpd for the first time since 1994.
“This is some very, very sophisticated brazen attack,” Dolapo Oni, the Lagos-based head of energy research at Ecobank Transnational Inc told Bloomberg. “It is a resurgence of militancy. These guys don’t seem to be after money. They just want to frustrate the government.”
Royal Dutch Shell stopped oil shipments following a key pipeline attack which supplies a terminal with an export output of about 250,000 barrels a day. Shell has been forced to evacuate a major oil field after militants issued threats of an attack.
The fresh round of attacks was fueled by President Muhammed Buhari’s vow to root out corruption and oil theft. The Niger Delta Avengers group says its goal is to bring down the Nigeria economy unless the government gives in to its numerous demands one of which is to clean up Ogoniland. The group also calls for the continuation of an amnesty program for militants in the region. During the reign of the Late-President Umaru Musa Yar’Adua, militants were given amnesty and disarmed in exchange for monthly payments from the government in some cases. In response to these demands, Nigeria’s president Buhari has ordered the military to “crush” the group.
The slump in energy prices in the Nigerian government has caused major damage on the economy and separate attacks in the north of the country by the Boko Haram Islamist insurgency further cripples the financial standing in the nation.
In the meantime, Angola recorded an increase in its production to 1.782 million bpd in March from 1.767 million bpd in February. Last November the country surpassed Nigeria in production level as it recorded a production of 1.722 million bpd, from the 1.607 million bpd produced by Nigeria.
Nigeria’s oil resource accounts for 70 percent of the country’s earnings, and this makes it even difficult for a country that is trying to fund a record budget deficit. Nigeria is still trying to deal with a fuel shortage crisis, caused by the government’s persistence on avoiding a deflation of its currency despite a steep drop against the dollar.
In a bid to resolve the issues, on Tuesday (May 10), the government declared a total removal of subsidies on petrol, saying marketers are “free to import” petrol subject to existing quality specifications but also set the new price of fuel at N145 ($0.73)—a 68% increase.
"Lower oil prices have meant that the poorer oil-producing countries don’t have enough money to pay for social services,” said Ehsan Ul-Haq, senior oil analyst at KBC Process Technology Ltd. “Protests are increasing as a result."
The country’s foreign reserves have fallen to less than $27 billion, the lowest since 2005. The International Monetary Fund, however, expects the economy to expand 2.3 percent this year, the weakest growth since 1999.
"If prices remain low, we will see more and more problems including this kind of sabotage attacks," said Ul-Haq.
Image credit: AP Photo/Sunday Alamba
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