…………Nigeria’s compliance, 239%
By Chibisi Ohakah, Abuja
The Organisation of Petroleum Exporting Countries (OPEC) has blamed the inability of Nigeria and a number of other members to pump enough crude oil, for the overall failure of the group to meet its production target for December 2021.
According to a recent survey by S&P Global Platts, the 13-member countries of OPEC and its allies led by Russia pumped some 620,000 barrels of oil per day below their combined quota.
West Africa saw the biggest individual decline last month, with Nigerian output tumbling and defying state-owned Nigerian National Petroleum Corporation (NNPC) Group managing director, Mallam Mele Kyari’s projections.
The survey showed that while Nigeria’s compliance at 239%, OPEC’s overall compliance stood at 116.5% for the month. The report further said that whereas the target for Nigeria was 1.67 million barrels per day for the month, it only produced 1.44 million barrels per day in December and 1.49 million barrels per day in November.
The development, Platts said, widened the gap between the production quotas set by OPEC and its allies and their actual production. Nigeria has been struggling to meet the quota allocated to it by OPEC but ageing infrastructure caused by years of under-investment in the upstream of the oil and gas sector, as well as pipeline hostilities has affected optimal production.
Sabotage caused by vandalism, technical issues, as well as difficulties with restarting oil wells the country shut down last year in the heat of the Covid-19 pandemic, have worsened the challenges.
The report noted that despite the setbacks, the largest individual increase in production was in Africa, where Angola boosted output by 90,000 bpd to 1.2million bpd. Although this was the highest monthly level in 2021, Angola was still 190,000 bpd below its December quota, the survey noted forecast that the country would reach its target by the end of last year.
The S&P data showed that OPEC’s 13 countries pumped 28.04 million bpd of crude, up 190,000 bpd from November, while nine non-OPEC partners pumped 13.98 million bpd, an increase of 120,000 bpd.
Fourteen out of the 18 members with quotas fell short of their targets, including even its largest producer Russia, whose compliance rose above 100% for the first time since February 2021, when severe winter temperatures shut-in wells and reduced pipeline flows.
But gains by Venezuela, Kazakhstan, Saudi Arabia, Iraq and Angola far outstripped losses by Libya and Nigeria, making December the 10th straight month that OPEC+ output increased.
The 19 members, subject to production targets, pumped some 620,000 bpd below their combined caps, the survey showed. The bloc has been hiking its quotas by a collective 400,000 bpd each month, which would put it on pace to restore production to pre-pandemic levels by late 2022.
But many countries are already maxing out their output levels or are close to it, lifting trader sentiment that was once quite bearish for the first quarter in anticipation of a major supply glut.
But Nigeria’s prospects remain clouded, with deteriorating infrastructure that has seen all of its key export grades, including Agbami, Bonny Light, Forcados and Qua Iboe face severe production issues throughout the last year.
It is expected that oil prices will be supported by the reluctance of many governments to restore the strict restrictions that hammered the global economy when the pandemic took place in 2020.
Platts said the news is both good and bad for Nigeria which should ordinarily earn more foreign exchange from the sale of crude but now has to deal with paying more subsidy since there’s a positive relationship between the international prices of the commodity and how much Nigerians get the product at the pump.
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