Militants hit Nigerian crude oil pipeline

Recent gains in Nigerian crude oil production have offset efforts by OPEC to balance the market with a cap on collective output.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   July 25, 2017 at 8:48 AM
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July 25 (UPI) -- A militant attack on a crude oil pipeline in Nigeria has sidelined more than 100,000 barrels of oil per day, the head of a state oil company announced.

Maikanit Baru, the head of the Nigerian National Petroleum Corp., said as-yet identified saboteurs caused a breach on a major transit artery, curbing 150,000 barrels of oil per day. The rupture from the Trans-Niger pipeline came as parties to a committee monitoring a production agreement coordinated by the Organization of Petroleum Exporting Countries, of which Nigeria is a member, met to consider its impacts.

Baru said the problem at the pipeline created obstacles to sustaining what he said was the 2.2 million barrels of crude oil production per day reached last week.

"Unfortunately, we have not been able to sustain it because we have challenges," he was quoted as saying by Nigerian newspaper Vanguard.

As of now, Nigeria is exempt from OPEC's efforts to balance an oversupplied market with coordinated production declines. The collective effort has come under pressure from supply gains from Nigeria and Libya, also exempt, but committee members in St. Petersburg said Nigeria may be willing to cap production as soon as it was able to sustain a production level of 1.8 million barrels per day.

Nigeria reported to OPEC that crude oil production in June was about 1.67 million barrels per day. In its market report for July, OPEC said recovery from Libya and Nigeria "added pressure to an already amply supplied" market.

Nigeria is exempt so it can steer oil revenue toward national security efforts. Production hit a historic low in April at 1.49 million barrels per day.

The Nigerian economy sank into recession last year, with a contraction of 1.6 percent. With oil production centers in the Niger Delta the target of rebels, production faltered last year and the economy was hard hit by the strains of weaker crude oil prices.

According to the Central Bank of Nigeria, the rate of annual inflation is about 18 percent. In a March assessment, the International Monetary Fund said that, if Nigeria does nothing on the economic front, growth will be around 0.8 percent this year, which would mostly come from some recovery in crude oil production.

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