OPEC Mute On Oil Production Policy: Nigeria To Meet Quota

OPEC Mute On Oil Production Policy: Nigeria To Meet Quota

In a brief meeting held via videoconferencing on Wednesday, February 1, the Organization of Petroleum Exporting Countries (OPEC) decided to go on mute mode regarding oil production policy.

The oil cartel decided there would be no change to its previous decision made in November 2022.

Before the OPEC meeting, the Joint Ministerial Monitoring Committee (JMMC) had urged all participating countries to achieve full conformity and adhere to the compensation mechanism.

In October 2022, OPEC+ agreed to cut its production target by 2 million barrels per day (bpd), which is about 2% of world demand, from November last year until the end of 2023 to support the market.

In June 2022, OPEC announced that it had increased Nigeria’s crude oil production quota from 1.766 million barrels a day in June to 1.799 million barrels per day for July 2022.

Again, in August 2022, OPEC increased Nigeria’s crude oil output quota to 1.830 million barrels per day (mb/d), taking effect in September 2022.

However, Nigeria has failed to meet its crude oil production quota since then. This is due to the country’s battle with crude oil theft in the Niger Delta region, which is the main source of crude oil in Nigeria.

However, OPEC has decided to go mute mode on production policy, Nigeria has the chance to meet its quota, finally. Since 2022, the Nigerian National Petroleum Company (NNPC) Limited has been taking active steps to tackle crude oil theft, in collaboration with state and third-party security agencies. The results have reflected a minimal increase in production as of December 2022.

According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country’s crude oil output without the addition of condensates for September 2022 was 937,766 bpd.

For October 2022, the output was 1,014,485 bpd.
Meanwhile, in November 2022, crude oil output was 1,185,604 bpd.
In December 2022, the output was 1,235,317 bpd.

In December 2022, Nigeria’s Minister of State for Petroleum Resources, Timipre Sylva, made a promise that Nigeria was working towards meeting its OPEC-approved crude oil production quota of 1.8 million bpd by the end of May 2023. He said:

“Our pipelines have issues and we have put a security structure in place involving the communities, security personnel, oil companies and government and we are beginning to see some early signs of improvement.
“Our production for example has improved from where we were in the past. We are producing over a million barrels now and we believe that when we have built confidence enough on the pipelines and all the producers begin to inject into the pipelines that have been secured, we will be able to produce quickly to meet our OPEC quota.”
During the 13th Global United Arab Emirates (UAE) Energy Forum on January 11, 2023, Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, said that Nigeria can achieve a 2.2 million barrels per day crude oil production output in 2023. He said:

“We believe we can hit a target of 2.2 mb/d but our budget target is 1.8 mb/d, but we know that it is practical to do 2.2 mb/d within 2023.”
During the January 10 KPMG Budget Day event via Arise TV, Tola Adeyemi, the Regional Senior Partner (Nigeria and West Africa) at KPMG said that outgoing and incoming government administrations need to tackle crude oil theft and low investments in the sector by oil producers to achieve the 1.69 million barrels per day crude oil benchmark in Nigeria’s 2023 budget.

Meanwhile, in December 2022, Nigeria’s National Security Adviser, Major General Babagana Monguno, warned that the Federal Government may lose an estimated $23 billion in 2023 if crude oil theft persists in the country.

A January 31 survey by Reuters showed that Nigeria cannot pump crude oil at the agreed levels. According to the survey, Nigeria’s crude oil output, which rebounded in December 2022, held at similar levels in January 2023. Reuters reports that there is more to do if the country will meet its target to lift output to 1.6 million bpd this quarter.

Source: Nairametrics

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