Emmanuel Addeh in Abuja
In spite of concerted efforts to increase crude oil production since the third quarter of 2022, Nigeria lost a gross amount of $13.5 billion because of its inability to produce its Organisation of Petroleum Exporting Countries (OPEC) quota in the 10 months spanning January and October, 2023, a THISDAY estimate has shown.
The analysis indicated that while the OPEC production allocation to the country remains 1.74 million barrels per day for the year, that is, about 522 million barrels in the 10 months, Nigeria failed to produce 150.4 million barrels during the period.
This left the country with an output of 371.6 million barrels between January and October instead of the 522 million barrels it was expected to produce, with a production loss of almost 30 per cent.
At an average oil price of $90 per barrel, the analysis showed that given the production deficit of 150.4 million barrels, the country may have lost a gross sum of $13.5 billion during the period.
The deficit oil production situation persists as the country continues to shop for new loans and is entering into negotiations with its colleague oil-producing countries to inject the much-needed foreign exchange into the economy.
It is believed that if Nigeria was producing its OPEC quota, the current liquidity crisis in the country’s foreign exchange market would be largely contained.
Earlier this month, the government of President Bola Tinubu announced that the Kingdom of Saudi Arabia had agreed to provide financial support to sustain the government’s foreign-exchange reforms.
Information Minister, Mohammed Idris, said the Saudi government pledged to make “a substantial deposit of foreign exchange to boost Nigeria’s foreign exchange liquidity”.
Before that, during a recent visit to the United Arab Emirates (UAE), the government announced that Tinubu had successfully negotiated, “A joint new foreign exchange liquidity programme between the two governments, details of which would be announced in the coming weeks.”
The federal government in the last few weeks had also disclosed that it had concluded plans to secure a fresh $1.5 billion loan facility from the World Bank as part of the efforts to address the fiscal gap in the 2023 budget.
In addition, the government recently approached the African Export-Import Bank for a debt-for-oil deal worth $3 billion to stabilise the crisis-ridden foreign exchange market. It’s unclear the status of those negotiations as none of them has materialised.
However, data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicated that whereas the country was expected to produce at least 52.2 million monthly, given its 1.74 million bpd, in January, it drilled 39.2 million barrels, while in February it was only able to produce 36.1 million barrels.
In the same vein, crude oil output was 39.2 million barrels in March; 30.1 million barrels in April; 36.8 million barrels in May and 37.8 million barrels in June.
It was 33.7 million barrels in July; 36.6 million barrels in August; 40.3 million barrels in September and 41.8 million in October of this year.
Although oil production has in the last few months, been on the upward swing, however, it is still a long way off the mark set by OPEC. Nigeria, which had a production of 1.35 million barrels per day in October, has continued to under-produce by as much as 390,000 barrels per day.
The country’s October crude oil volume of 1.35 million barrels per day was the highest production since January 2022.
Despite several promises, the country has been unable to fulfil its pledge to Nigerians and to OPEC, which recently slashed Nigeria’s quota for next year to 1.38 million barrels as a result of its lack of capacity to produce the quota already given it.
Authorities in the country blame oil theft, pipeline vandalism as well as waning investment in the oil and gas sector for the inability to ramp up production and meet the international oil cartel’s quota.
Speaking on the perennial inability of the country to meet its OPEC quota, the Minister of Petroleum Resources (Oil), Senator Heineken Lokpobiri, said recently that his priority at the moment is to ramp up production gradually to 2 million at the end of the year. The president remains the substantive petroleum minister.
“My sole agenda is to increase production. Once we increase production, we will get more revenue for the country. You know Nigeria is still more dependent on oil.
“Though the non-oil sector is also supporting the economy, a substantial part of our forex comes from oil. So, my ambition is to see how I can lead the sector to increase production so that we can get more revenue to deal with the funding of strategic projects in the country,” he said.
The minister highlighted that oil production was increasing steadily, adding that it has now moved close to about 1.4 million bpd.
The marginal increase in output in the last couple of months is partly attributable to the decision of the government and its partners to bypass parts of Nigeria’s problematic pipelines network and deploy other means of transporting its crude to the high sea.