Again, Nigeria, Other African Countries Led OPEC Oil Production Underperformers in January

•Oil price rises to $91.25

Emmanuel Addeh

Nigeria was once more unable to meet its oil production allocation by the Organisation of Petroleum Exporting Countries (OPEC) in January.

The country was only able to pump 1.46 million barrels per day of the expected 1.683 million bpd in January.

Although it achieved an improvement of 50,000 bpd on its 1.41 million bpd production in December 2021, the African continent’s biggest oil producer remained far from meeting its target.

When the OPEC allocation for the month was deducted from the actual oil produced, Nigeria in January lagged behind by as much as 223,000 bpd in the first month of the year.

But oil prices continued to rally yesterday, with a 17 per cent jump in January, the strongest January performance in a long time, as the expected global supply struggled to keep up with rebounding demand. Brent and WTI benchmarks recorded their highest levels since October 2014 last Friday and their sixth straight weekly gain.

On the last trading day of January, Brent Crude, Nigeria’s benchmark traded for as high as $91.25, up by over 1.17 per cent while the West Texas International (WTI) crude was up 0.68 per cent at $87.63 as at Monday night.

The tightening oil market was further exacerbated by a winter storm in the United States as well as geopolitical concerns arising from the brewing faceoff between Russia and Ukraine.

Added to that was the ongoing situation in the Middle East, where the United Arab Emirates (UAE) reported a third attack this month, from the Iran-aligned Houthis.

But in all, a Reuters survey sighted by THISDAY indicated that with a 2020 baseline of 1.829 million bpd, Nigeria achieved 369,000 barrels out of its cut, with a remaining cut pledge of 146,000. It’s compliance (over-compliance) was 253 per cent in January.

It showed that OPEC pumped 28.01 million bpd in January, up 210,000 bpd from the previous month but short of the 254,000 bpd increase allowed under the supply deal.

The producers’ group meets on Wednesday and was expected to stick to previously agreed plans despite the surge in oil prices to a seven-year high near $92 a barrel.

The OPEC+ agreement allowed for a 400,000 bpd production increase in January from all members, of which about 254,000 bpd is shared by the 10 OPEC members participating in the deal, OPEC documents showed.

With output undershooting the planned increase, OPEC’s compliance with its pledged cuts increased to 132 per cent in January, the survey found, up from 127 per cent a month earlier.

Nigeria has struggled for months to fully meet its quota due mainly to ageing upstream infrastructure, sabotage and outright oil theft.

In addition, the Group Managing Director, Nigerian National Petroleum Company (NNPC), Mr. Mele Kyari, had said that NNPC’s joint venture partners were unable to restart oil wells shut down in the heat of the COVID-19 pandemic.

But the survey showed that the biggest rise in January came from Saudi Arabia, OPEC’s top producer, which boosted output largely as promised according to the agreement.

Nigeria was also able to boost shipments of Forcados crude after a force majeure was lifted, although output is still in long-term decline, among the largest in OPEC.

The United Arab Emirates and Kuwait followed through on their higher quotas while Venezuela, which is exempt from the deal, pumped more as it halted a years-long decline in output.

Production fell or did not increase in Angola, Congo, Libya, Iraq and Iran, the survey found, in many cases, owing to a lack of capacity to produce more or because of unplanned outages.

Output in Iraq edged down, while Iran pumped at stable levels in January amid prolonged talks on reviving its nuclear deal with world powers, which would allow higher oil exports.

OPEC and allies, known as OPEC+, are unwinding record output curbs made in 2020 but are still withholding millions of barrels. In January, the cuts required of OPEC stood at 2.129 million bpd, according to Reuters calculations and OPEC figures.