People & Money

Nigeria’s Crude Oil Production Dipped 470,000 BPD In March –IEA

Nigeria failed to meet its production quota in March as it recorded a shortfall of  470,000 barrels per day production, according to the International Energy Agency (IEA) latest report.

According to data from the agency, the country had a production target of 1.72 million barrels per day but could only produce 1.25 million barrels per day. The February production was higher at 1.27 million barrels per day. This however excludes condensate.

The IEA however put the sustainability capacity of the country at 1.54million daily production just as it was said to be having a spare capacity of 0.29million during the period under review.

Unfortunately, Nigeria was second to the highest in terms of OPEC production compliance for March with 5.22 after Equatorial Guinea with 5.29.

The Minister of State for Petroleum Resources, Timipre Sylva in a recent interview stated that the country’s production has hit 1.4 million barrels per day. What could not be ascertained so far is, if that volume includes condensate.

Apart from OPEC quota restriction, the greatest problem bedeviling the oil and gas industry was the issue of crude oil theft which has discouraged investors and the Nigerian National Petroleum Company Limited (NNPC) from meeting their production targets.

Also Read: OIL: Nigerian Production Falls Short of Increased OPEC Quota

The Federal Government said it was determined to stop the economic devastation occasioned by the activities of illegal refiners, pipeline vandalism and crude oil theft in the country.

Sylva who was on an assessment tour on some illegal refinery sites at the Niger Delta region creek, said, it is unfortunate we have had a lot of insecurity around oil facilities and pipelines, this can no. longer be condoned. Mr. President has directed that this must stop.

“You are here as gallant officers to protect these facilities, henceforth we will be working closely with you to ensure that there is zero loss to our production.

“You have done so well so far as the Chief of Defence Staff said, there is still ground to cover, so let us all work together and protect these national assets for the good of all,” the minister said.

The minister said the final solution to the problem required three elements which included the involvement of the community, the government security and the operating companies.

He said the government was determined to stop it because it could not afford the continuation of the insecurity in the industry adding that the criminals have their days numbered.

“We are here to reclaim this industry for the country because the country has lost so much from the activities of these criminals and the government can no longer afford these activities,” the minister said.

Also speaking, the Chief of Defence Staff, Maj.-Gen.Lucky Irabor, said the assessment became necessary because of the economic losses being witnessed in the oil and gas sector.

Irabor said the economic losses were so huge and currently the economy of the country was bleeding.

“We urge you to revert the trend,” he charged the 146 battalions.

According to the CDS, our drive is to look at the value chain within the oil and gas space and get the actual criminals and those supporting them.

Oil markets struggling to navigate supply losses and dislocations stemming from Russia’s invasion of Ukraine received much needed support from US and IEA coordinated stock releases. IEA member countries agreed on 1 April to tap their emergency reserves for the second time in the space of a month, this time to the tune of 120 mb. The record volumes will provide welcome relief to an already tight oil market that’s facing heightened uncertainty amid the multitude of repercussions stemming from sanctions and embargoes targeted at Russia by the international community and consumer boycotts. Crude prices have eased by nearly $10/bbl following announcements of the US and IEA stock releases, with ICE Brent last trading at around $104/bbl.

Insisting that no supply shortage exists, OPEC+ countries agreed on 31 March to stick with a modest monthly output increment for May. In March, output from the alliance’s 19 members with quotas was up by a mere 40 kb/d, far below the planned 400 kb/d increase, and 1.5 mb/d below their target. Output from non-OPEC+ producers, most notably the US, also fell short of expectations at the start of the year. Non-OPEC+ output is now seen growing by 2 mb/d in 2022, 100 kb/d lower than in last month’s Report. From this month, our OPEC+ supply estimates will be published on our website.

Russian oil supply and exports continue to fall. So far in April, roughly 700 kb/d of production has reportedly been shut in. We assume these losses will grow to an average 1.5 mb/d for the month as Russian refiners extend run cuts, more buyers shun barrels and Russian storage fills up. From May onwards, close to 3 mb/d of Russian production could be offline due to international sanctions and as the impact of a widening customer-driven embargo comes into full force.

While some buyers, most notably in Asia, increased purchases of sharply discounted Russian barrels, traditional customers are cutting back. For now, there are no signs of increased volumes going to China, where refiners have cut runs as a recent surge in Covid cases and new restrictions have dented oil demand.

The stringent lockdowns in China have led us to further revise our estimate for oil demand in 2Q22 and for the year as a whole. In addition, more complete demand data for 1Q22, especially in the US, was sharply lower than preliminary estimates. As a result, global oil demand has been reduced by 260 kb/d for 2022 and is now forecast to average 99.4 mb/d, up by 1.9 mb/d from 2021.

Lower demand expectations and steady output increases from Middle East OPEC+ members along with the US and other countries outside the OPEC+ alliance should bring the market back to balance. But the outlook is mired in uncertainty and OECD industry stocks in February continued to draw at a steep pace to stand 320 mb below their five-year average. The IEA’s latest stock release thus provides a crucial buffer to oil markets and much needed relief to consuming countries.

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