On the average, Nigeria has managed to pump just over 1.2
million per day in the last few months, thereby losing the desperately needed
foreign exchange (forex) by the country.
With the aforementioned production volume, the country was
projected to lose about 500,000 barrels per day next month, which would amount
to about 15.5 million barrels for the month.
When multiplied with a pessimistic oil price of $70, it
would give about $1.085 billion.
Latest figures from the Nigerian Upstream Regulatory
Commission (NURPC), for instance, indicated that the country was only able to
pump 1.23 million barrels per day in August, 1.24 million barrels per day in
September, 1.22 million barrels per day in October and 1.27 million barrels per
day in November.
But with the increase of Nigeria’s hitherto 1.683 million
bpd in January 2022 to 1.701 million bpd by OPEC, meeting the target next month
would be an uphill task, if not impossible.
Nigeria’s three tiers of government that depend largely on oil
revenues for survival are also forecast to continue to feel the impact of the
severely hampered production.
For instance, the Nigerian National Petroleum Company (NNPC)
Limited was only able to remit N10.5 billion, which was 8.5 per cent of its
projected N122.7 billion to the federation account last month.
But the national oil company had blamed the inability to
restart oil wells shut down in 2020, when OPEC compelled member countries to
cut production for the declining production.
Added to that, it had listed issues with host communities,
vandalism, incessant force majeure on major assets as well as technical issues
leading to shutdowns as some of the challenges bedevilling the industry.
However, the major culprit remains Nigeria’s ageing upstream
infrastructure, following years of under-investment in expanding and
modernising the assets.
Although the Minister of State, Petroleum, Mr Timipre Sylva
and the Group Managing Director of the NNPC, Mallam Mele Kyari, had set the end
of 2021 to improve Nigeria’s production and meet the quota and that has not
materialised significantly.
In a statement after the 24th OPEC and non-OPEC ministerial
meeting where the decision to allocate an additional 400,000 barrels per day to
its members was arrived at on Monday, the producers’ group stated that it was
sticking to the gradual plan to unwind in view of the current oil market
fundamentals and the consensus on its outlook.
“(We) reconfirm the production adjustment plan and the
monthly production adjustment mechanism approved at the 19th OPEC and non-OPEC
ministerial meeting and the decision to adjust upward the monthly overall
production by 0.4 mb/d for the month of February 2022,” it announced.
Furthermore, OPEC asked its members such as Nigeria, to meet
up their production quota and urged those who had exceeded their allocation to
agree on a compensation plan by June this year.
“We reiterate the critical importance of adhering to full
conformity and to the compensation mechanism taking advantage of the extension
of the compensation period until the end of June 2022.
“Compensation plans should be submitted in accordance with
the statement of the 15th OPEC and non-OPEC ministerial meeting,” it added.
Meanwhile, in view of the development, oil prices rose about
two per cent on yesterday, even as the cartel said there were indications that
the Omicron coronavirus variant would have only a mild impact on demand.
Brent crude, Nigeria’s benchmark was up at $80.48 a barrel,
highest since November, while the United States West Texas Intermediate (WTI)
crude rose by $1.48, or 2 per cent, to $77.56.
Also, global manufacturing activity remained strong in
December, suggesting that Omicron’s impact on output had been subdued.
The supply crunch caused by members’ inability to meet
production may even be worse as Libyan output is likely to be about 500-600,000
bpd lower in the coming weeks, more than offsetting the planned monthly increase
in OPEC+ production.
The country’s oil firm said on Saturday oil output would be
reduced by 200,000 bpd for a week due to maintenance on a main pipeline, adding
to disruptions two weeks ago after militia blocked operations at the Sharara
and Wafa oilfields.
Speaking before the OPEC meeting, its Secretary General,
Sanusi Barkindo, stated that in 2022, the outlook correlates with a generally
positive trajectory with regard to market fundamentals.
He added that while there were some uncertainties, particularly
related to mutations of the coronavirus, there are signs that the global
economic recovery, supported by the contribution of the ‘Declaration of
Cooperation’ participating countries to oil market stability, can continue in
the year ahead.
0 comments:
Post a Comment