Can Nigeria’s Nembe grade crude boost output?

Nigeria has recently unveiled a new grade of crude oil known as Nembe through a groundbreaking joint venture with Aiteo. The first shipments of Nembe, totaling 950,000 barrels each, were successfully sold to France and the Netherlands in October. Oyeyemi Oke, a Partner at AO2 Law, shared insights and analysis on this significant development in the oil industry during an interview with CNBC Africa. Ms. Oke highlighted the positive impact of the new Nembe crude stream, emphasizing its high quality as a sweet crude due to its unique properties. The collaboration between indigenous partners, Aiteo and NNPC, signals a major milestone as it marks the first time Nigerian entities are solely responsible for managing and marketing such a major crude project. The projected production increase of 50,000 barrels per day is poised to boost Nigeria's overall output, offering promising prospects for revenue and economic growth. Despite facing challenges related to infrastructure, specifically delays linked to the Namba Creek trunkline (NCTL), the successful launch of Nembe is indeed a positive development for both producers and the nation. Looking ahead, the key to sustaining and accelerating production lies in addressing critical issues such as oil theft and sabotage. Ms. Oke commended NNPC's efforts in combating oil theft incidents, stressing the importance of employing multi-faceted strategies to effectively tackle this persistent challenge. Beyond security measures, she highlighted the importance of addressing socio-economic issues in oil-producing regions to create viable alternatives to illegal activities such as crude oil theft. As Nigeria aims to ramp up production volumes, ambitious targets have been set by NNPC, with plans to increase Nembe's production to 80,000 barrels per day by the first quarter of next year and exceeding 150,000 barrels per day by 2025. While these projections demonstrate a strong commitment to enhancing production capacity, concerns linger regarding the feasibility of meeting these targets. Ms. Oke noted that NNPC's track record of setting ambitious goals, such as seeking an increase in production quota to 2 million barrels at the upcoming OPEC meeting, underscores the company's proactive stance. However, current production figures indicate a shortfall in meeting existing quotas, with Nigeria's output hovering between 1.3 to 1.5 million barrels per day. As the industry strives to realize its production aspirations, achieving the set targets will require concerted efforts, strategic investments, and effective implementation of production plans.