Nigeria’s active rig count has dropped significantly by 30 per cent to seven in October 2020 as against 10 recorded in the previous month. The rig count is a reflection of the level of exploration, development, production and general activities taking place in the petroleum sector.
This shortfall is coming at a time the Organisation of Petroleum Exporting Countries, OPEC, also witnessed a significant drop in its rig count, having recorded 325 in September, as against 363 recorded the previous month, according to the latest OPEC monthly oil market report.
World rig count also witnessed a shortfall of two, having recorded 1,135 in the latest count, as against 1,137 recorded the previous month. Meanwhile, stakeholders at the Nigerian Association of Petroleum Explorationists, NAPE, have warned that the continued reduction in oil and gas exploration activities in Nigeria would have huge economic consequences for the country.
“Nigeria is at risk of long-term disruption to oil and gas supplies, power generation, a collapse of industries and significant loss of revenue due to reduction in hydrocarbon exploration activities.
“Reduction in hydrocarbon exploration and exploitation has dire consequences for a country like Nigeria with a mono-economy hinged on crude oil,” they noted. According to Lukman Otunuga, Senior Research Analyst at FXTM, “With Oil prices capped by demand-side factor, the International Monetary Fund’s 2020 growth forecast of -4.3 per cent could become a reality. “Outside of Nigeria, the most important risk event that remains relevant to the country is the upcoming OPEC+ Joint Ministerial Committee meeting.
While OPEC+ is unlikely to make any major decisions, the meeting may provide plenty of noise which could translate to price volatility. “One thing to keep in mind is that Nigeria oil production has fallen sharply due to ongoing OPEC+ output cuts. The latest figures from the cartel confirm that Nigeria is sticking to supply cut agreements by keeping oil production below 1.5 million barrels per day in September. “Given how oil sales account for a handsome chunk of export earnings and government revenues, this development is likely to compound the country’s woes.”