Oil Production Dips by 56.5m Barrels in Six Months

Nigeria's crude oil production dipped by a cumulative 56.559 million barrels in the first six months of 2021 compared with the quantity pumped during the same period last year, documents from the Department of Petroleum Resources (DPR), detailing activities in the oil sector have revealed.

The latest data released by the industry regulator, which was obtained by THISDAY yesterday, showed that while the total quantity of crude oil, including condensates drilled between January and June was 307.794 million barrels, during the same period last year, 364.354 million barrels were produced.

The shortage of 56.559 million barrels may not be unconnected with the dynamics of the international market and the quota allocated to the country by the Organisation of Petroleum Exporting Countries (OPEC), which it did not fully comply with until around the first quarter of 2021.

The international oil cartel had activated its Declaration of Cooperation (DoC) agreement in April last year after the historic decline in oil prices induced by the COVID-19 pandemic and the price war between Russia and Saudi Arabia. The country was producing roughly two million barrels per day before the near collapse of the oil market.

But despite the curbs, Nigeria and a few members pumped above their OPEC quota for months, before bringing down its crude oil production in the first quarter of the year to fully comply with its cap, which may have partly accounted for the lower production figures in the first half of 2021.

Earlier this year, while explaining why Nigeria couldn’t fully comply initially, Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, had said Nigeria needed time to meet its obligations and face some bottlenecks. He added that the obligations had been fully met.

“There is a distinction between what you can do immediately and what you can do over a period of time. Sometimes, we do have technical constraints that make it impossible to meet that quota.

“You may have seen through OPEC conversations that in some months we actually under-produced. Put on balance, Nigeria has completely complied with our obligations to OPEC,” he said.

In addition, the DPR document showed that 34 terminals/ streams produced the entire oil and condensates for the federal government and its joint partners for both years, although Aje, one of the oil facilities, only produced crude oil, with zero condensates for the year.

For the two years, there was no oil drilled from Atala, which hitherto belonged to Bayelsa, which was recently revoked by the federal government for non-performance and the Anambra basin.

Other terminals which contributed to Nigeria's oil production for the period were Bonny, Brass, Qua Iboe, Forcados, Escravos, Odudu, Tulja-Okwuibome, Okoro, Asaramatoru, Otakpipo and Antan.

Other terminals where oil was extracted included Okono, Yoho, Okwori, Ebok, Bonga, ERHA, Usan, Egina, Oyo, Abo, Pennington, Ukpokiti, Ugo Ocha, Sea Eagle, Anyala Madu, Agbami, Akpo and Ajapa. Ima did not produce any condensate in 2021.

Still on 2021 data, total production recorded in January was approximately 53 million barrels, it was 49.3 million barrels in February, while in March, cumulative production was 54.2 million barrels.

Similarly, in April, Nigeria drilled 50.611 barrels of oil, in May it was 51.438 million barrels, while in June, Nigeria recorded the lowest quantity of production of oil and condensates of 49.18 million barrels.

A further breakdown indicated that the daily average of liquids produced, including condensates for January was 1.711 million barrels per day, it rose to 1.760 million barrels per day in February, the country produced an average of 1.748 million barrels per day in March as well as 1.687 million barrels per day in April.

While the OPEC quota does not include condensates as actual oil production ranged between 1,400 barrels per day to 1.554 bpd in May average combined production was 1.659 barrels before reducing to 1.639 barrels per day in June this year.

NNPC documents had earlier revealed that Nigeria lost at least 52 million barrels of crude oil between May and December 2020 to the compulsory supply cuts imposed by OPEC.

On Monday, Minister of State, Petroleum Resources, Mr. Timipre Sylva, during a briefing in Abuja to mark the country’s 50th anniversary as a member of OPEC, had said that rationing production was the right thing to do at the moment.

The minister explained that apportioning quotas has not hurt the country’s production, noting that if not because of the cartel’s intervention, the price of crude oil, which fell into the negative territory around April last year would still be low.

Sylva stated that the 1.554 million barrels per day, which was allocated to Nigeria for June, excluded condensates, stressing that as of today Nigeria has fully complied without exceeding the total allocated to the country since the OPEC member countries agreed to cut production.