Nige­ria’s daily oil pro­duc­tion plunges to 1.57m bar­rels

The Punch - - ENERGY - ’Femi Asu

Nige­ria’s crude oil pro­duc­tion fell to a record low of 1.57 mil­lion bar­rels per day last month, the Or­gan­i­sa­tion of Petroleum ex­port­ing Coun­tries has said.

The pro­ducer group said in its monthly oil mar­ket re­port pub­lished on Wed­nes­day that the coun­try’s oil out­put stood at 1.66 mil­lion bpd in Novem­ber, based on di­rect com­mu­ni­ca­tion.

The group uses se­condary sources to mon­i­tor its oil out­put, but also pub­lishes a ta­ble of fig­ures sub­mit­ted by its mem­ber coun­tries.

Nige­rian crude pro­duc­tion in De­cem­ber was in line with its quota of 1.77 mil­lion bpd, ac­cord­ing to se­condary sources.

“Nige­ria is more sen­si­tive about pro­duc­tion than price. A lower oil out­put would af­fect the ac­tu­al­i­sa­tion of bud­geted rev­enue pro­jec­tions as oil rev­enue ac­counts for 31.35 per cent of the to­tal rev­enue pro­jected,” an­a­lysts at the Fi­nan­cial De­riv­a­tives Com­pany Lim­ited said in a re­cent note.

OPEC and its part­ners, in­clud­ing Rus­sia, agreed to cut out­put by a fur­ther 500,000 bpd from Jan­uary through March 2020, on top of their pre­vi­ous cut of 1.2 mil­lion bpd.

Ac­cord­ing to S&P global Platts, start­ing this month, Nige­ria’s quota drops to 1.75 mil­lion bpd un­der the OPEC+ coali­tion’s agree­ment to deepen its pro­duc­tion cuts through March.

Last week, the group Man­ag­ing Di­rec­tor, Nige­rian Na­tional Petroleum Cor­po­ra­tion, said the coun­try was shift­ing its up­stream work to­wards nat­u­ral gas liq­uids and nat­u­ral gas, to bet­ter com­ply with its crude pro­duc­tion quota un­der the OPEC+ agree­ment.

“You can pro­duce con­den­sate which is not part of the OPEC com­mit­ments. We are fo­cus­ing our pro­duc­tion to more gas-based reser­voirs so that we can con­tinue to grow our pro­duc­tion while main­tain­ing bal­ance in the mar­ket,” he was quoted as say­ing on the side­lines of the At­lantic Coun­cil global en­ergy Fo­rum in Abu Dhabi.

OPEC said in the re­port that a rise in oil demand growth this year would be off­set by a sharper in­crease in non-opec sup­ply.

“Con­tin­ued ac­com­moda­tive mon­e­tary poli­cies, cou­pled with an im­prove­ment in fi­nan­cial mar­kets, could pro­vide fur­ther sup­port to on­go­ing in­creases in nonopec sup­ply,” the re­port said, adding that OPEC+ cuts re­mained es­sen­tial in main­tain­ing sta­bil­ity in the oil mar­ket.

The pace of sup­ply growth is ex­pected to con­tinue to out­pace oil demand, fur­ther put­ting pres­sure on in­ter­est for OPEC crude, which means it may need to keep its cuts go­ing to bal­ance the oil mar­ket.

The group said demand for its crude would av­er­age 29.50 mil­lion bpd in 2020, which is 60,000 bpd above what it pro­duced in De­cem­ber.

How­ever, demand for its crude from Jan­uary to March this year, which is the du­ra­tion of its cur­rent cuts, is pre­dicted to av­er­age 29.19 mil­lion bpd.

Demand for OPEC crude av­er­aged 30.60 mil­lion bpd in 2019.

The group’s 14 mem­bers pumped 29.44 mil­lion bpd in De­cem­ber, com­pared with 29.61 mil­lion bpd in Novem­ber, ac­cord­ing to se­condary sources.

The fall was due to de­clines in nine of its mem­bers, led by Saudi Ara­bia.

Oil demand growth for 2020 was re­vised up by 140,000 bpd to 1.22 mil­lion bpd.

This up­ward re­vi­sion was said to be due to a bet­ter eco­nomic outlook for 2020 in var­i­ous economies, buoyed by im­proved trade sen­ti­ment be­tween the US and China.

For 2019, the re­port showed that oil demand growth only grew by 930,000 bpd.

NON-OPEC sup­ply is pro­jected to grow by 2.35 mil­lion bpd to 66.68 mil­lion bpd in 2020.

Ac­cord­ing to the re­port, the key driv­ers of growth in­clude the United States, Brazil, Nor­way, Rus­sia, Canada, Kaza­khstan and Aus­tralia, while there are ex­pected to be de­clines in indonesia, Thai­land, egypt and Colom­bia.

NON-OPEC sup­ply av­er­aged 64.34 mil­lion bpd in 2019, a year-on-year growth of 1.86 mil­lion bpd.

OPEC noted that the US crude out­put is “con­tin­u­ing to in­crease, de­spite the pull­back in drilling, as com­pa­nies are run­ning through their in­ven­to­ries of drilled but un­com­pleted wells.”

The US crude oil pro­duc­tion in 2020 is forecast to grow by 980,000 bpd to 13.18 mil­lion bpd.

OPEC and its al­lies plan to meet March 5-6 in Vi­enna to re­view their pro­duc­tion cut agree­ment and de­cide whether to ex­tend them.

•L-R: Ex­ec­u­tive Di­rec­tor, Tech­ni­cal/op­er­a­tions, Cor­ner­stone, Tokunbo Bello; Group Man­ag­ing Di­rec­tor/chief Ex­ec­u­tive Of­fi­cer, Cor­ner­stone, Ganiyu Musa; Head, List­ings Busi­ness Di­vi­sion, Nige­ria Stock Ex­change, Olu­mide Bolu­mole; Head, Cen­tral Claims Group and Spe­cial Risks Un­der­writ­ing, Cor­ner­stone, Olu­fun­mi­layo Amanwa; Group Head, Strat­egy, In­vestor Re­la­tions and En­ter­prise Risk Man­age­ment , Cor­ner­stone, Ade­wale Foster-aileru; and Head, Trad­ing Busi­ness Di­vi­sion, NSE, Jude Chiemeka, dur­ing the Clos­ing Gong cer­e­mony by Cor­ner­stone at the Ex­change in La­gos …on Wed­nes­day. Photo: Stan­ley Ogidi

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