Crude oil production in West Africa is set to fall by hundreds of thousands of barrels per day by 2026, as prolonged underinvestment in new and mature fields and ageing infrastructure will see output struggle to rebound from pandemic cuts, according to Rystad Energy.
Rystad has reduced its forecast for 2021 production in West Africa by 600,000 barrels per day from the pre-pandemic estimate to 3.39 million bpd, in line with a reduction in investment activity after major operators opted for capital discipline following a period of low prices and unstable market conditions.
This compared to output of 4.12 million bpd and 3.71 million bpd in 2019 and 2020.
According to Quantum Commodity Intelligence which quoted Rystard,, the region is an important producer of light, sweet grades of crude, which are richer in the output of higher-margin refined products such as gasoline, diesel and jet fuel.
Although production should tick higher in 2022 and 2023 when West Africa’s mainly sweet grades benefit from more demand as global jet usage rebounds, production will fall to just over 2.9 million bpd by 2026 if the biggest producers Nigeria and Angola are unable to reverse the effects of a decade-long decline in growth, said Rystad.
“The structural upstream obstacles that West Africa faces are realities that are not going away in the short term,” said Nishant Bhushan, upstream analyst.
“Even if jet fuel makes a spectacular recovery and demand for light and medium sweet crude grades returns, Nigeria and Angola, as well as other neighbors in structural upstream decline, will not be in a position to supply the market”.
The Rystad 2026 forecast included a decline to 1.25 million bpd for Nigeria, from an estimated 1.55 million bpd in 2022, as “output will continue to slide due to a lack of significant new discoveries”.
Output from Angola, West Africa’s second-largest producer, will move into a “downward spiral,” said Rystad, falling to between 750,000 bpd and 800,000 bpd by 2026 from 1.11 million bpd in 2021.