There appears to be hope for Nigeria’s crude oil export, as the United States increased importation of the product from the Organisation of Petroleum Exporting Countries (OPEC) by 227, 000 barrels per day (tbpd) in August, representing a three per cent increase over the previous month.
Meanwhile, OPEC member countries have invested $270 billion on 116 different development projects during the five-year period spanning from 2012 to 2016.
OPEC, which made this disclosure in its September monthly report/bulletin, described the increase as the highest since November 2012 when the U.S. engaged more in the utilization unconventional oil resources.
The organization, however, expressed doubt over the sustainability of shale oil in the longer term.
OPEC Secretary General, Abdalla Salem El-Badri, said: “While recent developments in the US have been transformative for its energy industry, we need to see how sustainable this type of production is in the longer term. For instance, the industry is already seeing tight oil fields reach a production plateau after only a year or so, and then witness a steep decline rate. There have been reports that shale wells can drop off by more than 60 per cent within the first year”.
Nigeria and other OPEC countries have been facing decrease in crude oil import from the US due to the exploitation of shale oil in the last few years.
This has made Nigeria to begin a search for new markets for its oil and gas resources.
El-Badri noted: “While some have viewed these new supplies as a threat to other producers, OPEC welcomes these developments. They support the global supply outlook and provide further proof to consumers that the world is not running out of oil”.
The organization said in the monthly report that Nigeria’s crude oil production decreased by 119.3 tbpd from the 1.783 million barrels per day (mpd) it recorded in the previous month to 1.663 mpd in August based on direct communication.
El-Badri noted that the investments by the OPEC countries represented one of the most important elements needed for the continued expansion of oil reserves and production.
“They are the lifeblood of the oil industry. Without investments now — in exploration, production, and expanded capacity — future supplies may not material- ize and future needs may not be met,” he professed.
“That is why OPEC continually provides its member countries with research about trends that may affect investment projects. It is also why the organization strives to ensure price stability, which is crucial for investments.”
El-Badri said that, as developing oil-producing countries, this was especially crucial for OPEC’s African Members. “Too high or too low a price was detrimental to their investment plans and as well as that of oil producers everywhere”, he said.
He pointed out that there are other ways the organization sought to support the objectives of its member countries. It conducted studies of emerging trends, such as changing environmental policies in consuming countries, shale oil and shale gas in North America and transportation trends.
“This helps our members better understand the challenges and the sources of uncertainty facing the industry,” he explained.
The report expects total Developing Countries’ (DCs) oil supply to increase by 50 tbpd in 2013 to average 12.17 mbpd, representing a downward revision of 20 tbpd from the previous month.
According to OPEC, the downward revision came from other Asia and the Middle East, while the forecasts for Africa and Latin America’s oil supply encountered minor upward revisions from the previous month.
It stated: “Overall, supply conditions within DCs remain unchanged with growth in 2013 coming from Africa and Latin America, while the Middle East’s and Other Asia’s supply are expected to decline. South Sudan, Sudan, and Colombia are the main contributors to the anticipated DCs’ supply growth in 2013, while Syria, Indonesia and Argentina are expected to have the largest decline. On a quarterly basis, DCs’ supply is expected to average 12.12 mbpd,12.05 mbpd, 12.22 mbpd and 12.29 mbpd, respectively”.
It noted that most African producers’ supply forecasts are either seen to be steady or declining in 2013, except for South Sudan and Sudan, and Ghana.
“Congo’s oil production is expected to decrease by 20 tbpd in 2013 to average 0.28 mbpd due to the natural decline impact of the Azurite field output. South Sudan’s and Sudan’s oil production is forecast to average 0.22 mbpd in 2013, an increase of 0.10 mbpd compared to the previous year, indicating an upward revision of 10 tbpd compared to the previous month. “The upward revision was introduced as the two nations averted the previously extended shutdown of the connecting pipeline and decided to continue with the established agreement. Further upward revision to the supply forecast might be experienced in the coming period if the two nations demonstrate commitment to the agreements. On a quarterly basis, African oil supply is seen to average 2.32 mbpd, 2.43 mbpd, 2.44 mbpd and 2.49 mbpd, respectively”, it said.
Information from The Guardian was used in this report.