November 10, 2023/CSL Research
The Nigerian National Petroleum Company (NNPC) Limited and Aiteo Eastern Exploration & Production Company Limited have launched a new crude oil grade called Nembe. The Nembe crude oil grade is produced from OML 29, an asset located onshore Nigeria and operated by Aiteo.
The Nembe crude is a light sweet crude oil with low sulfur content. It is similar to other high-quality Nigerian crude grades such as Bonny Light and Qua Iboe. The NNPC/Aiteo Joint Venture has already exported two cargoes of 950,000 barrels of Nembe crude to France and the Netherlands. The crude oil is expected to be in high demand from refiners around the world due to its high quality and attractive specifications.
The launch of the Nembe Crude Oil Grade is a positive development for the country given the low oil production in recent years that has stifled the country’s revenue generating capacity.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s oil production (with condensates) increased by 10.56% m/m in September 2023 to 1.57 mbpd compared to 1.42 mbpd recorded in August 2023. Without condensates, production grew to 1.35mbpd compared with 1.18mbpd in August. The perennial issues of pipeline vandalism, theft, and terminal shutdowns have kept production low. according to the National Security Adviser Nuhu Ribadu, crude oil theft leads to the loss of c.400,000 barrels of oil daily.
The need for the country to increase its production capacity cannot be overemphasized and the launch of the Nembe crude should contribute to production albeit marginally. Nembe production is currently around 50,000 barrels per day, but the NNPC is aiming to increase production to 80,000 by Q1 2024 and to 150,000 barrels per day by the start of 2025. The inability of the NNPC to supply crude oil to five modular refineries and the 650,000 bpd Dangote refinery has been reported to be delaying the commencement of production of refined petroleum products in those refineries.
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