Nigeria has for a fairly long time been pumping crude oil quite below the quota allocated to her in the ongoing OPEC+ cuts, as a document gleaned by EnergyDay on the 13-member organisation’s website showed that for January 2022, the country’s output last month was 1.46mbpd.
It was revealed that the country had pumped 1.41mbpd in December 2021 contrasting with 1.683 million bpd approved by the Organization of Petroleum Exporting Countries.
A Reuters finding showed that the Organization of Petroleum Exporting Countries, OPEC, barely managed to pump at target owing to the incapacity of member countries to live up to their targets notwithstanding the rise in oil prices.
Recall that international Brent recently jumped to $90 per barrel before again plummeting by 0.03-or 0.03% to $89.26 at 9:04AM Nigerian time on Wednesday.
It could be noted that OPEC output in January 2022 jumped by 210,000 barrels per day over the December 2020 production, in spite of this rise, Angola and Nigeria were among the producers that could not meet up.
“OPEC pumped 28.01 million barrels per day in January, up by 210,000bpd from the previous month but short of the 254,000bpd increase allowed under the supply deal,” the document read in part.
OPEC+ had agreed to allow 400,000bpd production increase in January from all members, of which about 254,000bpd was shared by the 10 OPEC members participating in the deal, according to OPEC documents.
Nigeria incapacity to pump more oil has given rise to a drop in revenue, and borrowings to fund its national budgets.
This state of affairs has also caused state oil company, the Nigerian National Petroleum Company Limited, NNPC to witness a significant decline in remittances to the Federation Account Allocation Committee, FAAC.
The NNPC continually blamed low oil output on pipelines vandalism, delay in the full implementation of the Petroleum Industry Act and its amendment, theft, and technical issues among others.
There has been low investment in the downstream sector by some oil majors doing business in the country.
Majority of these oil majors have also been dodgy in signing new exploration projects due to global energy transition.
Stakeholders fear Nigeria may not be able to boost production soon in order to increase revenue, even as OPEC says it sees a well-supported oil market in 2022.
In its closely watched Monthly Oil Market Report, MOMR, OPEC said the effect of the Omicron variant on global oil demand has been weaker than expected a month ago, and that the oil market is set to be well-supported throughout 2022 despite monetary tightening policies.
“In summary, monetary actions are not expected to hinder underlying global economic growth momentum, but rather serve to recalibrate otherwise overheating economies. With an ongoing robust oil demand forecast, and the continuing efforts of OPEC Member Countries and non-OPEC countries participating in the DoC, the oil market is expected to remain well-supported throughout 2022,” OPEC said.