Nigeria Raises Oil Output by 1.47m Barrels, Still 25% Short of Meeting OPEC Quota

Emmanuel Addeh in Abuja

Nigeria raised its Organisation of Petroleum Exporting Countries OPEC oil production quota by 1.47 million barrels in the whole of October, but still came short of the cartel’s expectation by a whopping 12.1 million barrels during the month.

A THISDAY analysis of the crude output data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), indicated that despite the marginal increase, the country was still under-producing OPEC’s 1.742 million bpd by more than 25 per cent.

In all, during the month of October, the total volume of crude oil produced by Nigeria was 41,867,775 barrels as against 40,396, 863 drilled in the preceding month of September.

At the given OPEC production figure, Nigeria should have drilled over 52 million barrels per day to meet the expectation of the 13-member oil producers’ group.

The Nigerian authorities have at various times shifted the deadline for meeting the OPEC quota of 1.742 million barrels per day, which had earlier been slashed from over 1.8 million bpd following the country’s inability to ramp up production.

OPEC has recently further reduced the quota for next year to 1.38 million bpd, raising concerns over the country’s ability to fund its budget for 2024.

Among other government decision makers in the sector that have given assurances, the Permanent Secretary, Ministry of Petroleum Resources, Gabriel Aduda, had in July this year in Vienna, Austria, said that by November 2023, Nigeria would be producing up to 1.7 million barrels per day of crude oil.

However, a review of the latest NUPRC data for the month showed that Nigeria produced 1.35 million bpd in October, recording a deficit of up to 392,000 bpd during the month under consideration.

Also, the Minister of State, Petroleum (Oil) Senator Heineken Lokpobiri, in October stated that Nigeria’s target was to produce as much as 2 million bpd by the end of 2023. It’s unclear how the government intends to achieve the target, especially with the slow rate of recovery in production.

Earlier in the year, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari,  maintained that Nigeria could hit 2.2 million bpd in 2023, without OPEC restriction.

But Nigeria is continuing to undershoot its target, the NUPRC data showed, even though October’s production figure remained the highest since at least since January 2022. It grew from about 1.34 million bpd in September, the information indicated, to 1.35 million bpd in the month under review.

However, the self-reported figure is usually lower than calculations by secondary sources used by OPEC, which get some of their information from shipping lines, among others. OPEC was expected to release its own data late yesterday.

But according to the production data released by the industry regulator, NUPRC, output from the Bonny terminal rose substantially from 3.7 million barrels during the whole month of September to 4.1 million in October, to boost Nigeria’s crude volume.

At the Qua Iboe terminal, production rose marginally from 4.3 million barrels to 4.5 million barrels in October, while at the Odudu terminal total volume drilled rose from 2.6 million barrels to 2.9 million barrels.

At the Tulja Okwuibome terminal there was a rise of production from 1.3 million barrels to 1.5 million barrels even as volume drilled from Bonga increased from 3.6 million barrels to 4.2 million barrels.

However, production fell in some major terminals in the Niger Delta, including output from Brass, Forcados, Escravos, Erha and Nembe, among others.

Since 2020, Nigeria has not been able to meet its OPEC crude oil allocation. The country blames massive oil theft, waning investment, deteriorating infrastructure and outright sabotage or vandalism for the current inability to markedly increase output.

According to the NUPRC report, when condensates, which are outside OPEC’s computations are added, Nigeria’s total production for the month rose to 1.56 million barrels per day during the month under consideration.

Recall that in September, Nigeria’s crude oil production improved, rising by a volume of roughly 165,429 barrels per day during that month.

Since January 2022 when Nigeria managed to produce 1.39 million bpd, it had struggled to reach that level again, with the lowest production for that year being just above 900,000 bpd.

The inability of the NNPC and its partners to produce enough crude oil has further worsened the crisis in the foreign exchange market where a dollar currently exchanges for over $1,000 at the unofficial window. Nigeria gets about 90 per cent of its dollar earnings from the export of crude oil.

The country had approached Afreximbank and recently Saudi Arabia to help boost its foreign exchange inflows. The results of those negotiations are yet to manifest.