BLOG: Militants Cut Oil Production 17% in Nigeria, Pushing Recession

BLOG: Militants Cut Oil Production 17% in Nigeria, Pushing Recession
Despite daylong ceasefire, another set of militants attack oil pipelines, compounding problems for the industry, citizens and Nigerian government.

Militants in Nigeria who assert their violent attacks on oil production are designed to coerce the government into spreading its oil wealth around to the poor citizens have taken a counter-intuitive approach to helping their neighbors.

Deon Daugherty
Deon Daugherty, Senior Editor, Rigzone
Senior Editor, Rigzone

You see, those pipeline explosions that have rocked the Nigerian Delta in recent months have definitely made an impact. They’ve slashed Nigeria’s oil production by almost a hundreds of thousands of barrels a day. And as it happens, Nigeria’s oil production accounts for roughly 75 percent of the nation’s wealth.

Fewer barrels of oil produced equates to fewer barrels exported, which leads to less money coming into the country and even less cash available to help the poor.

Following months of explosions and oil infrastructure derailment, oil production in the Organization of the Petroleum Exporting Countries (OPEC) member nations has dropped close to 700,000 barrels per day (bpd) to 1.56 million barrels per day. In its 2Q report on the national economy, Nigeria’s National Bureau of Statistics reports that oil production in the country has declined, hitting the nation’s economy with a 17.48 decline year-over-year.

A recession – widely recognized as something detrimental to both national and personal budgets – is generally defined as a significant economic decline that’s visible across several sectors and lasting for several months.

In Nigeria, the gross domestic product has been on a downswing – initially a certain result of the oil downturn – since 2014. 

The most populous nation in Africa, Nigeria’s 173 million people compose 47 percent of the continent’s population, according to the World Bank. Almost 90 percent of Nigeria’s exports are oil-based.

One day after a militant group in Nigeria declared a ceasefire, another one is picking up the slack. And the fall-out from the violence is taking a toll on the West African country's oil production and economic viability.

While the bulk of the explosions along pipelines in Nigeria have been carried out by the Niger Delta Avengers, a group whose attacks appear designed to coerce government officials there to more evenly distribute its oil wealth, it was the Niger Delta Greenland Justice Mandate that blew up a pipeline Aug. 30.

The group, which has disparaged other militants for talking to the government, told Reuters it’s on a mission toward “getting justice for the people.”

There could be a better way to achieve that goal than blowing up the system.

An award-winning journalist, Deon has reported on energy, business and politics for almost 20 years. Email Deon at deon.daugherty@rigzone.com

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