In the midst of lack of enough revenue to meet her financial obligations, the country in the month of July lost $2.16billion because of its inability to meet the allotted OPEC production quota to it.
On the average, the country lost 720,000 barrels per day (bpd), and this did not allow her to meet her daily 1.8 million OPEC production quota.
The total volume of crude oil the country could not produce or lost for that month was estimated at 21,600,000 barrels. With an average price of $100 per barrel per day, this amounted to $2,160,000,000.
The production level of July was lower than that of June which was estimated at 1.16 million barrels per day by about 80,000 barrels.
With low crude oil production coupled with the fact that most of the revenue realised from the sales of crude oil is used to purchase refined product, especially Premium Motor Spirit or petrol, the country’s economy situation is serious danger as expected revenues that are supposed to accrue to the Federal and States Governments and states is reduced.
Zainab Ahmed, Minister of Finance, Budget and National Planning cried out recently that: “We are not seeing the revenues that we had planned for. When the production is low it means we’re … barely able to cover the volumes that are required for the (petrol) that we need to import,”
The Federal Government through the Nigerian National Petroleum Company Limited has 60 equity shares in many of the oil companies.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) latest crude oil and condensate production data for July 2022, the country experienced 6.42 percent decline in July production.
The reason for this shortfall was not given, but industry sources said the inability of oil companies to evacuate their product through the Trans-Niger Pipeline, a major pipeline capable of transporting about 180,000 barrels of crude per day, since mid-June, 2022 due to theft, may be one of the reasons.
The pipeline capacity is about 15% of Nigeria’s most recent average daily output.
However, with condensate production, oil output in July grew to a total of 1.31 million bpd from 1.40 million posted last month.
Condensate is a mixture of light liquid hydrocarbons, similar to a light (high API) crude oil — usually separated out of a natural gas stream at the point of production
Further analysis of production statistics for the previous months indicated that In January, the country’s crude oil production averaged 1.39 barrels, February, 1.25 million bpd, March, 1.24 million bpd, April, 1.22 million bpd, and May 1.02 million bpd, respectively.
Nigeria has consistently failed to meet the 1.8 million bpd production quota set by the Organisation of Petroleum Exporting Countries (OPEC).
In March, Timipre Sylva, Minister of State for Petroleum Resources, had said poor investment and the exit of oil majors were affecting Nigeria’s ability to meet the oil production quota.
He also mentioned security issues as another major factor contributing to the lack of significant growth of the sector, adding that the drive towards renewable energy by climate enthusiasts had discouraged funding for the industry.
Recently, OPEC and its allies, known as OPEC+, agreed to raise September’s oil output target by 100,000 barrels bpd – in what appears to be a snub to US President Joe Biden’s call for a more robust increase which could lead to an easing of global supply pressures.
The group cited low investment in the global oil sector, and unavailability of excess capacity, as reasons for the small increase.
