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Storing up trouble: how long can Nigerian production be sustained?

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13 May 2020

Storing up trouble: how long can Nigerian production be sustained?

Report summary

Nigeria’s oil producers are in a crisis the like of which even they have not seen before. That’s some claim for a country that has suffered dramatic supply outages in its recent history. The huge over-supply and demand destruction which has affected the global upstream industry is still to unwind itself and current prices are not enough to cover production costs for many. Even so, Nigeria's producers are resilient - we think production shut-ins are unlikely. The biggest risk is declining storage space as a backlog of cargoes builds. NNPC is particularly impacted by its lack of downstream integration while the IOCs are continuing to lift crude for now. There are signs of recovery in global market fundamentals, but higher prices are needed soon to avoid production constraints.

Table of contents

  • Executive Summary
  • Short-run costs are not being covered
  • Why shut-ins are unlikely for now
    • Lack of integration hurts NNPC
    • Integrated IOCs fare better
  • Storage fill poses a growing risk
  • Is recovery on the way?

Tables and charts

This report includes 4 images and tables including:

  • Nigeria's short-run marginal cost stack
  • Build-up of floating storage at Bonny
  • Crude storage capacity in Nigeria (million barrels)
  • Impact of monthly 950,000 bbl cargo deferrals on large FPSO storage capacity

What's included

This report contains:

  • Document

    Storing up trouble: how long can Nigerian production be sustained?

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