… boosts June Production by 432,000bpd
Mixed reactions have trailed the announcement that OPEC increased Nigeria’s production quota allocation for June to 1.772 million bpd despite the fact that it could not meet her April production quota.
The meeting that was held by OPEC on Thursday agreed to up the production allocation to the country for June to 1.772 million bpd, even though the country had been underperforming for over a year and was barely able to drill 1.4 million bpd.
The country’s inability to raise its production, therefore, means that it’s not able to benefit from high oil prices, which temporarily exceeded $110 on Thursday.
An OPEC production schedule allocating next month’s oil production ration showed Nigeria’s share of global crude drilling will rise by 19,000 bpd for the month, with OPEC hiking it from 1.753 million bpd in May to 1.772 million bpd in June.
Aside Nigeria, which received the highest share among African oil-producing nations, Angola was allocated 1.480 million bpd, coming second on the African continent, while Algeria will produce 1.03 million bpd and Congo 315, 000 bpd.
Reacting to this development some stakeholders described the news as sadness and joy. This is because some felt the nation’s citizens have no much to benefit from it.
Those who expressed sadness about the development said that the gain of that increase would not be felt by Nigerians because of subsidy of f Premium Motor Spirit or Petrols. This is because according to them even though the price of crude oil is high now the price of imported fuel is also high at the international market.
One industry analyst asked Business Standards that of what use is the increment if as the government is collecting the revenues she also pumping it into unproductive exercise like subsidizing fuel.
Another person said: “Why increase the quota when the government has demonstrated a high level of slothfulness in dealing with crude oil thieves who may take advantage of this development to increase the tempo of their nefarious activities by hacking the pipelines.”
The Organisation of Petroleum Exporting Countries (OPEC) and its allies known as OPEC+ have however agreed to stick to last year’s plan to gradually release just over 400, 000 barrels per day of oil into the market, leaving the deal unchanged.
As predicted earlier, the oil producers’ group, like in the previous months, said it was boosting crude oil production next month by 432,000 bpd during a meeting attended by members of the organisation.
In other climes, Saudi Arabia and Russia, OPEC+ biggest producers got approval to drill 10.663 million bpd each next month, meaning that while the OPEC 10, excluding Libya, Venezuela and Iran, which are exempted, are to produce 25.864 million bpd, non-OPEC members will drill 16.694 million bpd, to hit 42.558 million bpd for the month. The decision was taken after a very short virtual meeting, the third since one of the key members of the alliance, Russia, invaded Ukraine.
Although OPEC has been under severe pressure from the United States and its allies to ramp up production as energy prices continue to skyrocket, however, this month’s decision could be justified due to slowing oil demand in China and a chance that crude losses from Russian supply could pile up.
A short statement after the meeting stated that following the conclusion of the 28th OPEC and non-OPEC ministerial meeting, it was noted that continuing oil market fundamentals and the consensus on the outlook pointed to a balanced market.
It further noted the continuing effects of geopolitical factors and issues related to the ongoing Covid-19 pandemic.
The participating countries therefore agreed to: “Reconfirm the production adjustment plan and the monthly production adjustment mechanism approved at the 19th OPEC and non-OPEC ministerial meeting and the decision to adjust upward the monthly overall production by 0.432 mb/d for the month of June 2022.”
The group also resolved to: “Reiterate the critical importance of adhering to full conformity and to the compensation mechanism, taking advantage of the extension of the compensation period until the end of June 2022.”
Furthermore, it noted that compensation plans should be submitted in accordance with the statement of previous ministerial meetings, and therefore fixed its next conference for June 2, 2022 to decide July’s production volume.
olusola Bello