Nigeria’s oil output dropped by 11.47 per cent year-on-year, YoY, in the second quarter of 2021 (Q2’21).
But the decline also showed significant under-production against the quota, Organisation of Petroleum Exporting Countries, (OPEC) data have shown.
In its July 2021 Monthly Oil Market Report (MOMR), obtained by LEADERSHIP, OPEC disclosed that on the average, the nation produced 1.343 million barrels per day in Q2’21 compared to 1.517 mb/d produced in Q2’20. This also compares negatively with the OPEC quota of 1.4 mb/d.
Specifically, the report has it that the country produced 1.372 mb/d, 1.344 mb/d and 1.313 mb/d, in April, May and June, 2021 respectively, compared to 1.705 mb/d, 1.436 mb/d and 1.411 mb/d, produced in the corresponding months of 2020.
At the Q2’21 average output the country requires about 500 mb/d output of condensate to meet its 2021 budgetary target of 1.8 mb/d. But currently the estimated condensate output is put at 400 mb/d, indicating a likely significant shortfall.
However, the shortfall may not affect revenue estimates since the 2021 oil revenue was based on oil price of $40 per barrel, while actual price in recent weeks have hovered above $70 per barrel.
Meanwhile the OPEC report, which painted a bright prospect for the oil market in the remaining part of 2021, stated: “World oil demand growth in 2021 is forecast at 6.0 mb/d, unchanged from last month’s assessment, although there have been some regional revisions. Total oil demand is projected to average 96.6 mb/d.
“The Q1’21 was revised lower, amid slower than anticipated demand in the main Organisation for Economic Co-operation and Development (OECD), OECD consuming countries. This was counter-balanced by better-than-expected data from OECD Americas in Q2’21, which is now projected to last through the Q3’21.
“Solid expectations exist for global economic growth in 2022. These include improved containment of COVID-19, particularly in emerging and developing countries, which are forecast to spur oil demand to reach pre-pandemic levels in 2022.”
Meanwhile, Nigeria’s crude oil exports fell by a whopping 41.9 per cent year-on-year in the first quarter of 2021. This is according to data contained in the Central Bank of Nigeria’s balance of payment report.
Nigeria received in its current account, crude oil and gas export proceeds of $6.48 billion in the first quarter of 2021 compared to $11.1 billion in the corresponding period in 2020. It also represents a 16.4 per cent drop when compared to the $7.7 billion recorded in the 4th quarter of 2020.
Crude oil and gas export proceeds of $54.5 billion in 2019 made up about 84 per cent of the government’s export earnings. However, crude oil and gas exports declined to $31.4 billion in 2020 as Covid-19 pandemic triggered a global economic lockdown crashing oil prices to below zero in the second quarter of 2020.
OPEC member countries have had to endure year-long collective crude oil cuts to help limit supplies, shoring up prices. While this has contributed to the stabilisation of oil prices, member countries have seen their revenues plummet as they cannot push out as much volumes as they would have preferred.
Nigeria is currently pegged to an export volume of about 1.4 million barrels per day, remarkably less than the 1.8 million barrels per day production volume that it has averaged over the years and a far cry from its 2.5 million barrels per day production capacity.
According to a presentation on the 2021 budget performance by Nigeria’s minister of finance, Dr Zainab Ahmed, Nigeria has abided by the OPEC+ cut despite this production capacity.
However, crude oil production is projected to increase to 1.86 million barrels per day in 2021, as economies recover from the recession, and moderated by OPEC+ quota agreements, as stated by the minister of finance.
It is worth noting that, apart from the decline in Nigeria’s crude oil production, earnings were also affected by the inability of India to buy as much crude from Nigeria.