Nigeria’s output to exceed 2.3m barrels daily
The global benchmark Brent crude hit a four-month low yesterday, threatening the expected accretion to the Excess Crude Account (ECA) this year. The steep decline in oil prices had forced the National Assembly to settle for $53 per barrel as the oil benchmark price for this year’s budget, down from $65 proposed by the executive, which had to adjust it twice, from $78 to $73, and later to $65.
The ECA, into which the country saves the difference between the market price of oil and the budget benchmark to provide a cushion when oil prices fall or extra cash is needed for spending on infrastructure, was rapidly depleted in the fourth quarter of last year as oil revenues plunged. The account, which stood at about $4.11billion in October 2014, dropped to $2.45 billion in December, down from about $3.11billion in November. The balance of the ECA as at May 2015 is $2.07 billion, according to the Ministry of Finance.
Oil prices have recently shown signs of stabilising, with Brent trading at $68 per barrel in May, after losing about 60 per cent of its value between June 2014 and January. It reached a peak of $115 per barrel in June last year. Brent, against which Nigeria’s oil is priced, hit $53.33 per barrel on yesterday, its lowest level since late March.
The fall came after a steep drop in China’s stock markets spread concerns about the economic health of the world’s biggest energy consumer, amid evidence of a growing crude glut. Oil was also pressured by the sharp increase in the United States drilling activity last week, after data on Friday showed producers adding 21 rigs, the most in over a year, suggesting a ramp up in output as crude futures recovered from six-year lows seen in the first quarter, according to Reuters.
Meanwhile, Nigeria’s crude output is set to receive additional 330, 000 barrels monthly boost from Oil Mining Lease (OML) 113 – a development that will lift the nation’s total daily production to above its current 2.3 million barrels. MX Oil, which is working on the field, announced this yesterday, saying that drilling that had commenced on the Aje 5 production well would be completed in 70 days.
The country’s output got the additional 330, 000 barrels of crude oil monthly surge from the Aje field, operated by Yinka Folawiyo Petroleum (YFP), located some nautical miles of Lagos offshore Nigeria. While the phase 1 of the project, which is to be put on stream in the next 70 days represents 11, 000 barrels per day, Phase two of the scheme is targeting an increase in gross production to 19,000 barrels per day from an additional two well development.
Once drilling operations at Aje 5 are completed, the Scarabeo 3 (mid-water semisub) used to drill the well will complete the Aje 4 well. “These two wells represent the first of a threephase development programme for Aje. Phase one is targeting first oil in December 2015 and peak gross production from these two wells is expected to reach 11,000 barrels of oil per day, as stated in the June 2015 Competent Persons Report (CPR),” the statement added.
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