Despite Easing OPEC Cuts, Covid-19 Restrictions, Nigeria Produced 70m Barrels Less Oil in 2021

Emmanuel Addeh

Despite being a year marked by the lifting of Covid-19 lockdowns, restriction of movement and easing of cuts by the Organisation of Petroleum Exporting Countries (OPEC), Nigeria produced less crude in 2021 compared with 2020.

Updated data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), detailing Nigeria’s crude oil and condensates production for both years indicate that while the country pumped about 546.5 million barrels of oil the previous year, it only managed to produce 477.4 million barrels in 2021.

However, analysis of the NUPRC data indicated that when condensates are added to the total quantity of oil produced, the 2020 number rose to 670.8 million, while in 2021, it fell to 590.7 million barrels, raising the difference to 80.1 million barrels between the two years.A

Condensates are valued lower than crude oil because of their high light ends content and are exempted from current OPEC quota rationing.

Last year, the federal government hinged its N13.08 trillion budget on an oil price benchmark of $40 per barrel and a daily oil production estimate of 1.86 million barrels, inclusive of condensates of between 300,000 to 400,000 barrels per day.

The central government also based the budget estimates on the exchange rate of N379 per US dollar, Gross Domestic Product (GDP) growth was projected at 3.0 percent, and inflation was expected to close at 11.95 per cent. None of the benchmarks was met at the end of last year.

Severe restriction of movement was the hallmark in most countries of the world due to the pandemic in 2020, resulting in less need for transportation fuel and for use in industries and invariably impacting negatively on oil prices.

But in spite of being a tumultuous year for the global oil and gas industry, a comparison of the two reports, updated by the commission showed that Nigeria pumped less oil in the 12 months of 2021, put side by side its production for the same period last year.

The information indicated that in 2021, the country failed to produce a drop of oil from Asaramotu, Ajapa, Anambra basin, Oyo stream and Ukpokiti while condensates were not produced from Tulja Okuibome, Aje and Ima terminals.
Nigeria’s total oil production has been on the decline for several months, with Libya overtaking the country in October last year as Africa’s number one oil producer. But with the tensions in that country, the next month, Nigeria again emerged as Africa’s topmost oil producer.

Minister of State, Petroleum Resources, Mr Timipre Sylva and the Group Managing Director of the Nigerian National Petroleum Company (NNPC), Mallam Mele Kyari, although assuring that Nigeria would restore its production capacity by the end of 2021, the pledges have largely failed.

Aside ageing upstream infrastructure, oil theft and outright sabotage, the government blames the difficulty in restarting the oil facilities shut down in the heat of the pandemic for the falling production figures.
A number of the country’s oil assets had been shut down as a result of compulsory OPEC cuts due to covid-19 and the need to fully comply with the mandatory reduction in production.

However, experts have blamed years of under-investment, ageing production facilities resulting in frequent shutdowns, sabotage, vandalism, community issues and incessant force majeure by Joint Venture (JV) partners for the declining production.

The NURPC figures showed that while total crude oil and condensates of 65.9 million barrels were produced in January 2020, it declined to 53 million barrels during the same period in 2021, a difference of 12.9 million barrels.

Furthermore, 62.4 million barrels of both crude oil and condensates were produced in February 2020; 65.8 million barrels in March; 62.9 million barrels in April; 55.3 million barrels in May and 51.4 million barrels in June of 2020.

In the same vein, 52.7 million barrels were pumped in July; 52.8 million barrels in August; 50 million barrels in September, 52.3 million barrels of both condensates and crude oil in October while 51 million barrels and 47.3 million barrels were pumped in November and December of 2020 respectively.

In contrast, in February 2021, 49.3 million barrels of both liquid types were pumped; 54.2 million barrels in March; 50.6 million barrels in April and 51.4 million barrels in May.

Furthermore, 49.1 million barrels were produced in June; 50.8 million barrels in July; 47.4 million barrels in August; 45.9 million barrels in September while 47.2 million barrels; 46.2 million barrels and 45.6 million barrels were separately pumped in October, November and December of 2021 .

In total, while 670.8 million barrels of crude oil and condensates were produced between January and December of 2020, in the 12 months of 2021, it fell markedly to 590.7 million barrels.

But while crude oil production took a major hit in 2021, the production of condensates proved resilient and almost at par with 2020 figures.

As expected, the data showed that Bonny, Qua Iboe, Forcados, Excravos, Brass, Egina, Bonga , Akpo and Agbami terminals yielded the highest barrels of both crude oil and condensates for both years.

Nigeria’s capacity to fill its production vacuum had degenerated progressively from 30,000 barrels per day in October 2020 to 301,000bpd in August last year, culminating in 215,000 bpd as of September, 2021.

The country’s variance from actual required production levels was around 30,000bpd in October 2020; 47,000bpd in November of the same year and 103,000bpd in December 2020.

The negative production figures continued in 2021, with 181,000bpd in January; 43,000bpd in February; 43,000bpd in March; 63,000bpd in April and continued to soar to 124,000bpd; 155,000bpd and 201,000bpd in May, June and July respectively, hitting its peak yet in August with a huge figure of 301,000bpd.

When he resumed office, the new Chief Executive Officer of the successor agency to the Department of Petroleum Resources (DPR) Mr Gbenga Komolafe, had said that his immediate priority was to raise the country’s crude oil production from September 2020’s 1.4 million barrels per day to about 2.4 million bpd in the coming months.

Last month Komolafe stressed that with OPEC production quota of 1.683 million bpd in January and 1.701 million bpd in February, Nigeria is only able to pump about 1.396 million bpd currently, leading to a loss of at least 115,926 million bpd on a daily basis, put at roughly $300 million monthly.

“ We are losing about 115, 926 barrels per day , so that literally translates to roughly about $300 million and that’s a huge loss to a nation that actually requires these funds,” he stated.

The commission’s chief executive attributed the underperformance to mostly oil theft, sabotage, vandalism as well as technical issues, including ruptures associated with the assets.

“But the larger percentage is due to crude oil theft and as a commission we know the impact of this and recognising our regulatory role, we have been able to reach out to other operators as to what we can do about this.

“We are trying to put in place an industry-wide initiative to ameliorate the situation and we are expecting to go live in terms of implementation in collaboration with the Nigerian National Petroleum Company (NNPC) and the other stakeholders,” he added.