Earns $342.92m in 7 months
By Obas Esiedesa, Abuja
Nigeria’s crude oil and condensate production averaged 1.62 million barrels per day in the first four months of this year, latest data from the Nigerian National Petroleum Corporation (NNPC) has shown.
NNPC data showed that cumulatively, Nigeria produced 195.14 million barrels from January to April, 2021.
According to NNPC, January production was 49. 258 million barrels (1.58 million barrels per day), while February production was 45.357 million barrels (1.62mb/day). In March, production was 51.225 million barrels (1.65mb/day) while April production was 49.3 million barrels (1.63mb/day).
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NNPC, in its monthly reports to the Federation Account Allocation Committee (FAAC), however, showed that $342.92 million was realized from the sales of crude oil it lifted in the first seven months of the year.
The reports indicated that $24.32 million was received in January, $30.99 million in February; $93.37 in March; 1.89 million in April; $167.72 million in May; $11.68 million June, and $12.95 million in July.
In preparation for the 2022 Budget presentation, the Senate had last week passed the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).
The Senators approved Federal Government’s revenue projection of N8.36 trillion; and proposed expenditure of N13.98 trillion.
Accordingly, it also approved the daily crude oil production of 1.88mbpd, 2.23mbpd, and 2.22mbpd for 2022, 2023 and 2024, particularly “in view of average 1.93mbpd over the last 3 years and the fact that a very conservative oil output benchmark has been adopted for the medium term in order to ensure greater budget realism”.
The Senate also approved the benchmark oil price of $57 per barrel.
This came as the Organisation of Petroleum Exporting Countries (OPEC) in its Monthly Oil Market Report for the Month of August revealed that Nigeria was unable to meet its crude oil production quota of 1.54 million per day.
OPEC reported that Nigeria produced 1.27mb/day in August, a major drop from the 1.44mb/day produced in July. The production figure reported to OPEC does not include condensate production.
Speaking to Vanguard Public Finance in a telephone interview, energy expert and former head of British funded Facility for Oil Sector Transparency and Reform (FOSTER), Mr. Henry Adigun said huge cost of restarting a field, instability in fiscal terms and vandalism were responsible for Nigeria’s low production level in the past.
Adigun was, however, optimistic that with stable oil price and fiscal terms, production would improve as from this month.
According to him, “The challenge is that if you shutdown most of the operations, restarting them is not straight forward. Our rig count was five a few months back and as at last week we were at eleven, so we have moved. A lot of factors affect rig count.
“One is price of oil in the market. When oil price is not very good and you shutdown, it takes a lot of cost to recover. If you look at the cost and it doesn’t look good on your balance sheet then you don’t recover. In the last few weeks we restarted about three fields.
“The other issue is the damage and vandalism that is going on around. The level of vandalism is very high and it is under-reported. Agip, Shell and some other companies have suffered serious damages in their areas, limiting their ability to contribute to production, this has led to shutdowns”, he stated.
He expressed optimism that future report would show increased production, projecting that Nigeria may be able to produce about 1.4mb/day in September.
“The good thing is that (with the Petroleum Industry Act) the fiscals are now out, so people now understand longer term planning, and can actually do better than they could do before when it was hazy.
“The key thing is that the environment about three months ago was not stable enough to get companies to restart production. So when the Department of Petroleum Resources (DPR) allocates you 40,000 barrels or 30,000 barrels and then you have capacity, restarting a facility cost money”.
He also noted that Nigeria’s plan to hit over two million barrels per day production level by next “is also feasible because rig count is now eleven as at last Friday. The next report you will see, we will be doing at least 1.48/1.49mbp/day”.
He added that with oil price stabilizing and the fiscals known, Nigeria will in about nine month’s time attain 2.2mb/day production level with condensate.