Nigeria’s Utapate Crude Production Faces Setbacks After Promising Start
Nigeria’s nascent low-sulfur crude oil grade, Utapate, has encountered production challenges in its initial months of operation. Following a promising ramp-up period, output has declined for three consecutive months, raising concerns about the stability and long-term prospects of this strategically important crude stream. Launched with much fanfare in 2024 as a premium, environmentally friendly product, Utapate was positioned to bolster Nigeria’s position in the global oil market and command premium pricing. However, the recent downturn highlights the complexities and vulnerabilities inherent in bringing a new oil field to full production capacity.
The Utapate blend, extracted from Oil Mining Lease 13 and operated by NNPC Exploration & Production Limited in partnership with Natural Oilfield Services Limited (a SEEPCO subsidiary), achieved peak production of 1.299 million barrels in January 2025. This represented a significant increase from the initial 309,434 barrels produced in May 2024, demonstrating the potential of the Utapate stream. However, since reaching its zenith in January, production has steadily decreased to 1.226 million barrels in March and further down to 1.155 million barrels in April 2025. This downward trend translates to a daily production average of 28,000 barrels, significantly below the targeted 50,000 barrels per day set by the Nigerian National Petroleum Company Limited (NNPCL). The discrepancy between the projected and actual output underscores the operational hurdles facing the Utapate project.
The reasons for the decline in Utapate production are multifaceted and likely stem from a combination of factors. Industry analysts often attribute such fluctuations in new field developments to logistical, technical, and operational challenges. These can include unforeseen geological complexities, equipment malfunctions, pipeline issues, and logistical bottlenecks in transporting the crude to market. Furthermore, navigating the intricacies of a new production environment inherently involves a learning curve for operators, which can impact output in the initial stages. Addressing these challenges will be crucial for NNPCL to stabilize and eventually ramp up Utapate production to meet its ambitious targets.
The significance of Utapate lies in its low sulfur content of 0.0655 percent, making it a highly sought-after commodity in the international market, particularly in regions with stringent environmental regulations. This characteristic allows refineries to produce cleaner fuels that meet increasingly demanding emission standards. The initial success in securing buyers for Utapate, with Repsol and Gulf Transport and Trading among the early customers, underscored the strong market demand for this type of crude. Maintaining this momentum and capitalizing on the premium pricing opportunities for low-sulfur crude will depend on NNPCL’s ability to overcome the current production challenges.
While the Utapate situation poses a specific challenge, it also reflects broader issues affecting Nigeria’s oil sector. The NUPRC report identifies five oil fields with zero production in April 2025: Ima, Ajape, Anambra Basin, Ukpokiti, and Asaramatoru. These inactive fields highlight the systemic challenges plaguing the industry, including persistent underinvestment, security concerns disrupting operations, and operational inefficiencies. These factors contribute to the volatility of Nigeria’s oil production and hinder its ability to maximize its resource potential.
Despite the setbacks with Utapate and the challenges faced by other fields, Nigeria’s overall crude oil production reached 1.48 million barrels per day in April 2025, representing 99% of the OPEC quota. This near-compliance with OPEC targets suggests a degree of resilience in the sector. However, sustained growth and stability will necessitate addressing the underlying issues affecting individual fields like Utapate and the broader operational environment. Long-term strategies focused on attracting investment, improving security, and enhancing operational efficiency will be crucial for unlocking the full potential of Nigeria’s oil resources and ensuring a sustainable future for the industry. The success of Utapate, as a flagship low-sulfur crude, will serve as a bellwether for the country’s ability to adapt to the evolving demands of the global energy market.
