Nigeria: Oil output drops despite rising prices
Nigeria pumped 1.48 million barrels of crude oil in June, witnessing a significant drop in production compared to previous months, a latest S&P Global Platts survey has shown.
This drop is despite rising oil prices and opportunities for improved earnings.
According to the latest S&P Global Platts survey, Nigeria posted the heaviest drop in output in June, due to significant operational issues, compared to 1.55 million recorded in May.
The survey showed that the country produced 1.48 million of crude in June, its lowest level since January, as some of its large oil fields, especially those in the Niger Delta like Bonny, Escravos, Brass River and Qua Iboe, are pumping well below their full capacity due to either technical problems or maintenance.
Nigeria’s production volume is below the 2021 budget estimate for the year, thus affecting the capacity to earn more, alongside subsidy challenges.
Indeed, OPEC’s 13 members pumped 26.19 million barrels per day in June, up 480,000 bpd from May, mostly due to Saudi Arabia’s continued unwinding of its voluntary extra production cut.
The group’s nine non-OPEC partners, led by Russia, produced 13.27 million b/d, a rise of 60,000 b/d from May. Despite the production gains, higher quotas for the month meant OPEC+ compliance was at 110.16% compared to 111.45% in May, the survey found.
The coalition has now added 970,000 b/d in the past two months, as parts of its plans to relax its output quotas to meet the growing demand for its oil.
The Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Mele Kyari, had said that oil prices were “very high” and had started to constrain both producers and consumers.
“Producers are aware that when your prices are too high, you lose your customers. You have to bring it to a level that your customers can afford,” Kyari said during a television interview.
Oil prices have risen more than 50 percent in 2021, amid a recovery in demand buoyed by vaccine rollouts and OPEC+ supply discipline.
“The only way to pull down prices is to increase supply. So, that is what is going to happen. OPEC is going to intervene to see how we can bring down prices,” Kyari said.
Kyari said the rise in oil prices was hurting Nigeria, which relies heavily on fuel imports for its needs. Nigeria has four refineries with a combined nameplate capacity of 445,000 b/d, which are all offline after years of neglect, making the country fully reliant on refined product imports.
Guardian/Hauwa Abu
