Nigeria under-produces OPEC’s crude oil quota by 30.6M barrels in two months
Nigeria, Africa’s biggest crude producer, drilled 30.6 million less barrels of oil in January and February compared to the quota allocated to the country by the Organisation of Petroleum Exporting Countries (OPEC) during the period.
A review of data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for the two months showed that while in January, Nigeria drilled 39 million of the 55 million barrels allocated to it, in February this year, it only managed to produce 36.5 million of the total projected output of 50.4 million barrels.
The 13-member OPEC group distributes oil production quotas to its members based on market conditions to ensure price and supply stability in the global oil market. Nigeria’s share of that quota was 1.8 million barrels per day for both months under review.
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For over two years, Nigeria has been unable to meet its OPEC production quota for what it blames on oil theft and pipeline vandalism in the Niger Delta.
But in the second half of last year, just before production fell to a historic 900,000 bpd, the government in collaboration with local security groups took steps to curb the menace.
The development led to the significant increase in Nigeria’s production to 1.3 million bpd in February, although Africa’s most populous country was supposed to produce 1.8 million bpd for the period.
The erstwhile Minister of State, Petroleum Resources, Chief Timipre Sylva and the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mallam Mele Kyari, have had to shift the date Nigeria will meet its OPEC production quota several times in the last two years.
However, while Sylva before his exit had pledged that finally, Nigeria was on its way to fulfil its production obligation in May this year, Kyari in February promised that Nigeria intends to hit 2.2 million bpd, without OPEC restrictions this year.
“We have crossed 1.6 million barrels per day, this is not rocket science. We have a line of sight to recovery to the quota level of 1.8 million barrels per day. I know that it is not far away probably two to three months maximum. But we will be there and that will bring back partners to invest, return the confidence of our investors and ultimately bring back growth.
“For us, we see a trajectory of restoring production including condensates within the year. We believe we can hit a target of 2.2 million bpd, but our budget target is 1.8 million bpd, but we know that it is practical to do 2.2 million bpd within 2023,” he said on at least two occasions in February.
On his part, Sylva who projected that normalcy will return by May this year, stressed that: “Once we are able to build enough confidence in the security of the pipelines, producers will then be able to inject into the pipelines once again.”
However, when the NUPRC data is analysed against the 1.69 million barrels per day oil production benchmark in the 2023 Nigerian budget in contrast to the OPEC production quota of 1.8 million bpd, the deficit reduced, with the country recording about 23.7 million barrels in both months.
A recent review showed that with that huge deficit production recorded in January and February, despite the rise in production and against the $83 price per barrel of oil for both months, the country could have lost as much as $2 billion in gross revenue, translating to about N920 billion at the N460 to a dollar official exchange rate.
In recent times, the largest volume of production has come in from Forcados with 6.93 million barrels during the month, followed by Escravos terminal with 4.03 million barrels during the period.
But when condensates are added, Nigeria produced 46.3 million barrels in January, while in February it drilled 43.3 million barrels. That is 1.5 million bpd in January and 1.54 million bpd in February. Condensates are outside OPEC computations for oil production.
Aside oil theft, another critical challenge hindering production, has been the years of underinvestment in the sector.
This has now been made even worse by the decision of the Europe and America to halt the funding of hydrocarbons exploration due to their impact on the environment.
