*Nigeria recorded 560,000 bpd, 17.3m barrels deficit in August
*Estimated $1.47bn/N1.12tn gross revenue lost to underproduction in one month
Emmanuel Addeh in Abuja
Despite continuing assurances that Nigeria would soon meet its Organisation of Petroleum Exporting Countries (OPEC) oil production quota, the country under-produced to the tune of over 560,000 barrels per day in August 2023 or about 17.3 million barrels during the period under consideration.
A THISDAY analysis of the latest data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), showed that although Nigeria’s production increased marginally from 1.08 million bpd in July to 1.18 million bpd in August, it was still a far cry from the 1.742 million bpd allocated to the country by OPEC.
That would leave Africa’s ‘biggest’ oil producer with a deficit volume of at least 560,000 bpd valued at a gross sum of $1.47 billion or roughly N1.12 trillion in just the month of August, at a conservative $85 per barrel and N765/$ official rate.
Since around the first half of 2020, Nigeria had been unable to meet its OPEC allocation. The country had blamed crude oil theft and massive assets vandalism for its inability to meet the producer group’s quota.
The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari, had in July, admitted that Nigeria was nowhere close to where it ought to be in terms production volume, but went on to make projections.
“Current production is nowhere near Nigeria’s capacity. We had a clear case when during the Covid-19, we had capacity to do close to 2.1 million bpd. So, we know we have the capacity.
“The issues are around the pipeline, and once we are able to resolve the challenges, then, we can produce higher,” he stated.
Displeased with Nigeria’s persistent excuses, in June, OPEC resolved to reduce the county’s production quota from the current 1.742 million bpd to about 1.38 million bpd in 2024. Nigeria has vowed to review the decision with the cartel’s leadership in November.
“We are more confident to get a new quota than we have at the moment. The country’s target is at the very least, 2 million bpd. And when you add that to the condensate production, you would get a higher number, and of course that would also meet the expectation of the country,” Kyari added. It’s unclear how that would be achieved with the current situation.
In January, the erstwhile Minister of State, Petroleum Resources, Chief Timipre Sylva, had said Nigeria was working towards meeting its OPEC crude oil production quota of 1.8 million bpd at the time, by the end of May 2023. It’s been four months since the expiry of that date.
“Once we are able to build enough confidence in the security of the pipelines, they (producers) will then be able to inject into the pipelines once again and once that happens, we will be able to meet our OPEC quota. That is where we are going and the early signals are there that we are making very good progress,” Sylva added.
Also in July, the Permanent Secretary of the Ministry of Petroleum, Mr. Gabriel Aduda, who oversaw the ministry until the recent appointment of ministers by the Bola Tinubu administration, had assured that between July and November, Nigeria would exceed its OPEC quota.
“It’s every country’s dream to be able to cap and max out on production. And that is what Nigeria is doing at the moment. As we speak, we’re capping at about 1.2 million barrels and that is because of the challenges we’re having, especially with security challenges in the Niger Delta and what have you.
“But of course, that doesn’t mean that we are stopping at that because we’re working hard to ramp up production. As you’re aware, we have this year about 1.7 million bpd…We’re looking at between now (July) and November to be able to do that” Aduda stated.
Despite the projections, in July, the country’s crude production shrank to a three-month low of 1.081 million barrels per day, on the back of persisting crude oil theft and a leak at the Forcados terminal in the Niger Delta.
With the low volume of oil drilled in July, it would mean that Nigeria failed to produce as much as 661,000 barrels per day during the period.
However, the August data just released by the NUPRC indicated that although most terminals made marginal gains, Brass lost close to 100,000 barrels during the period, falling from 759,456 barrels in July to 656,024 barrels in July.
Besides, crude oil production from Escravos slumped from 4.777 million barrels in July to 4.62 million barrels in August while at the Odudu terminal, total volume drilled reduced from 2.92 million barrels to 2.91 million barrels.
At the Okoro facility, production fell from 221, 575 barrels in July to 107,306 barrels in August, the same way it slumped from 957,366 barrels in Yoho terminal to 901,163 barrels.
The story was the same in Usan, with production between July and August reducing from 916,284 barrels to 748,200 barrels respectively in both months. Oyo was completely offline in August after it came on stream for the first time in 2023, with 41,841 in July.
At the Jones creeks, production dropped massively from 624,645 barrels in July to 295,349 barrels in August, same with Sea Eagle with a decrease in volume from 561,889 barrels to 442,167 barrels.
In all, when condensates which are excluded from the OPEC monthly computation are included, production during the month was 1.4 million barrels per day in August as against 1.3 million barrels per day in July.
Nigeria, which has had its FX market seriously challenged for years, recently through the NNPC made a move to borrow $3 billion from the AfreximBank. It’s currently unclear what has happened to the deal.
However, there were reports recently that the deal had been stalled because full disclosures as to what the oil-for-debt funds were going to be used for at the time the agreement was signed were not made. The NNPC has not refuted the insinuation.
Nigeria’s FX crisis is made worse because according to latest data from the National Bureau of Statistics (NBS), crude oil exports account for 80 per cent of the country’s export revenue. The crude production projection in the 2023 budget is 1.69 million bpd.