Libya has overtaken Nigeria as Africa’s biggest oil producer after the country’s crude oil production fell further last month amid lingering supply disruptions.
According to a new report by the Organization of the Petroleum Exporting Countries (OPEC), Nigeria’s oil output fell to about 1.23 million barrels per day in October from about 1.25 million bpd in the previous month, the cartel’s latest report released on Wednesday revealed.
OPEC noted that Libya overtook Angola as the second-biggest producer on the continent in December last year, saw its oil production rise to 1.24 million bpd in October from 1.16 million bpd in September, based on direct communication
OPEC uses secondary sources to monitor its oil output, but also publishes a table of figures submitted by its member countries.
Nigeria’s production declined by 45,000 bpd to 1.35 million bpd in October from about 1.40 million bpd in September.
According to secondary sources, Nigeria also recorded the second-biggest drop in output in October among its peers in OPEC, after Iraq, based on direct communication. The country’s production fell the most in the month.
The 13-member oil cartel said its total crude production averaged 27.45 million bpd in October, higher by 220,000 bpd month-on-month, according to secondary sources.
It said, “Crude oil output increased mainly in Saudi Arabia, Venezuela, the UAE, and Kuwait, while production in Nigeria, Gabon, and Equatorial Guinea declined”.
OPEC said crude differentials of light and medium sweet crude rose in the Mediterranean and West African markets in October on good buying interest from European buyers, strong refining margins, supply disruptions in Libya and Nigeria.
It added that “However, soft demand from Asian refiners for Atlantic Basin crude amid unfavourable west-to-east arbitrage capped the rise. Crude differentials of Bonny Light, Forcados, and Qua Iboe rose firmly on a monthly average in October by 70¢, $1.06, and 75¢, respectively, to stand at premiums of 10¢/b, 27¢/b, and 4¢/b”.
A London-based economic research firm, Capital Economics, said in a note that the increase in OPEC’s oil output in October was below its target of 400,000bpd.
It said, “Once again, Angola and Nigeria were largely responsible for this undershoot. Operational issues brought about by a lack of investment in oil-producing facilities continue to plague output in both countries, while Nigeria is also grappling with recurring militant attacks on key pipelines”.
The firm said with these issues unlikely to be resolved soon, OPEC would probably continue to undershoot its planned increases in output in the months ahead.
It said, “This will do little to alleviate the signs of undersupply in the oil market. For example, the price spreads between front-month futures and longer-dated futures are now as negative as any time in recent years, which normally indicates a lack of near-term supply.
“Despite persistently undershooting its target, we doubt OPEC will make any major changes to its output policy at its next meeting on December 2. Admittedly, external pressure on the group has continued to grow, with the US now reportedly considering a release of oil stocks from its strategic reserve.”