Nigeria's Crude Production Recovery Bolstered by End of Workers Strike

The end of strikes is seen as another win for a country that may soon reclaim its title as Africa's top oil producer.

Trouble-plagued Nigeria, which RBC Capital Markets has previously said could single-handedly re-balance the global market if its output went offline long enough, has taken another step in fortifying its industry – and is presumably stoking fears that the oil glut will persist indefinitely.

The Petroleum and Natural Gas Senior Staff Association of Nigeria have called off their strike action a week after approximately 2,000 workers laid down their tools over unresolved issues.

The strike was cancelled when an agreement was reached to recall fired workers and the federal government vowed to settle an estimated $4.8 million in arrears of a joint venture arrangement.

The events follow news last month of repairs to pipelines damaged by militant attacks.

Ibe Kachikwu, Minister of State for Petroleum Resources for Nigeria, says when the repairs are completed crude output will rise this month to 2.2 million barrels per day (bpd), a marked increase from 1.3 million bpd during the height of the attacks, and an improvement over the  1.8-1.9 million bpd output recorded in June.

Nigeria's recovery could also mean it reclaims the title as top African oil producer from Angola, whose output the Organization of Petroleum Exporting Countries (OPEC) in its latest monthly report states as soaring toward 2 million bpd.

Incidentally, that report pegs Nigeria's June output at only 1.5 million bpd compared to 1.4 million bpd for May, which conflicts with the numbers provided by Kachikwu; but regardless, both parties agree that output is growing.

The report said that crude output for June increased mostly from Nigeria, Iran, Saudi Arabia, Libya, and the United Arab Emirates, while production declined in Venezuela and Iraq.

Meanwhile, in its assessment of who will be the top global growth drivers in 2017, OPEC cited Brazil and Canada as the primary candidates, while Mexico, the U.S., and Norway are expected to see declines.

Last month, Nigeria announced that in addition to the gains it has made, it signed a deal with China North Industries Group Corporation (Norinco) for a potential $8.5 billion worth of investment and is looking to raise up to $50 billion in total to boost its oil production.