Nigeria’s Crude Oil Under-production Hit 14.88m Barrels in March, $1.488bn Lost to Lack of Capacity

Emmanuel Addeh in Abuja

Nigeria only managed to pump 1.238 million barrels per day, although it had a fixed 1.718 million barrels per day production quota from the Organisation of Petroleum Exporting Countries (OPEC) in March, 2022 a new report from the cartel has indicated.

At a time that the country should be harnessing every dollar it could possibly earn from what could pass for its sole foreign exchange earner, crude oil, the Nigeria, going by a THISDAY review, was unable to drill as much as 14.88 million barrels for last month.

Nigeria has been on a borrowing spree since it currently lacks the ability to shore up its oil production, its main source of foreign exchange, and last week, the National Assembly approved N4 trillion as petrol subsidy for the Muhammadu Buhari-led government for 2022.

According to the OPEC’s Monthly Oil Market Report (MOMR), citing direct communication with Nigeria, Africa’s largest oil producer was only able to pump 1.238 million bpd as against 1.258 million barrels per day it produced per day in February.

Placed against the country’s OPEC quota of 1.718 million barrels per day for March, this was a whopping deficit of 480,000 bpd in in the month under review.

When these daily losses are calculated for the entire 31 days of March, this would be 14.88 million barrels for the whole month and about $1.488 billion at a conservative oil price of $100 per barrel.

While OPEC uses secondary sources to monitor its oil output, it also publishes a table of figures submitted by its member countries, the one it terms “direct communication.”

Nigeria has been unable to reap the benefit of high international oil prices as it has consistently failed to ramp up production for over a year to meet its OPEC quota.

Massive oil theft, outright sabotage, community issues and the inability of the country to restart the oil wells it shut down in the wake of the Covid-19 pandemic in 2020 have been blamed for the development.

Even the marginal fields awards which would, if they were producing, add to the country’s total output, has largely only made slow progress since the process started, with awardees paying huge interests on their dormant working capital.

However, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), last week assured that the marginal field award programme closure was in sight, with winners expected to move to site around June.

“Before the first half of the year, we want to see a situation where some of the awardees will be proceeding to field development plan. At the moment again, we have recorded close to 90 per cent of the co-awardees forming their Special Purpose Vehicles (SPVs) and at that stage, it is the very comfortable stage when the commission can go ahead to issue Petroleum Prospecting Licences (PPLs)” he assured.

But in all, the OPEC-13 crude oil production averaged 28.56 million bpd in March, higher by just 57,000 month-on-month when compared with February as output increased mainly in Saudi Arabia, Kuwait and the UAE, while production declined in Libya, Nigeria and Congo.

Saudi Arabia raised its production by 54,000 bpd to 10.262 million bpd in March, according to OPEC’s secondary sources, which compares with 10.331 million bpd quota for Saudi Arabia for March per the OPEC+ deal.

The Saudis self-reported March crude oil production of 10.300 million bpd, while the UAE raised its production by 23,000 bpd to 2.983 million bpd, compared to a quota of 2.976 million bpd.

In the same vein, Kuwait’s production rose by 25,000 bpd to 2.639 million bpd, in line with its quota under the OPEC+ deal.

However, although Nigeria failed to meet its production quota, its rig counts increased by two, from eight to 10 in March, but  it was an average of five in Q2 2021, 10 in Q3 and seven in Q4 of the same year, but fell to eight in Q1, 2022.

Recently, a THISDAY’s review showed Nigeria is producing far less oil than it did 25 years ago when the estimated population was much less than what it is today and government spending was far below what it is in 2022.

A comparison of the country’s average oil production per day in 1997, as indicated in the Nigerian National Petroleum Corporation (NNPC) yearly statistical bulletin, showed that while Nigeria pumped 2.344 million barrels per day, plus condensates over two and a half decades ago, it can hardly produce 1.4 million as of this year.

Furthermore, while 26 rigs were in operation, on both onshore and offshore terrains, in 1997, Nigeria at present has just 10 active oil rigs, with a number of them not even in use.