The Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) have increased Nigeria’s oil quota to 1.830 million barrels per day (mbpd) from September 2022, from 1.826mbpd in August 2022.
This was part of actions, targeted at achieving increased stability in the global oil market.
Consequently, prices of many crudes, including Nigeria’s Bonny Light, bounced back to over $100 per barrel in the global market.
But it was doubtful if Nigeria, currently producing about 1.4 mb/d, including condensates, would meet its target because of increased pipeline vandalisation, oil theft and illegal refining in the Niger Delta.
OPEC agreed to marginally increase output next month amid fears that a global recession will crash demand.
The OPEC and its allies, including Russia, also known as OPEC+, said yesterday that it would produce an additional 100,000 barrels a day in September.
This was the first OPEC meeting since US President Joe Biden visited Saudi Arabia last month.
Biden urged the country, which is the group’s biggest oil producer, to start pumping more.
For months, prices have climbed as Western embargoes on Russian oil have limited global supply. Those prices have helped the world’s biggest oil companies reap record profits, even as millions face surging fuel bills.
The price of Brent crude, the global benchmark, also hit a high of $139 a barrel in March in the days after Russia invaded Ukraine, but Brent is now trading at around $100 as traders fear a global recession will hurt demand.
Brent crude and West Texas Intermediate crude, the North American benchmark, both rose nearly 2 per cent yesterday after OPEC’s announcement, as oil investors expected a bigger increase in production.
Still, OPEC expressed concerns yesterday that global supply will not be able to meet demand after 2023.
It said that emergency oil stocks among the 38 countries belonging to the Organisation for Economic Cooperation and Development, which includes the world’s biggest economies, are currently at their lowest levels in more than 30 years.
Last month, the International Energy Agency (IEA) warned in a report that ‘global oil inventories remain critically low,’ and posed an especial risk to emerging economies.
For months, OPEC+ has tried to reverse production cuts made during the pandemic when demand for oil cratered.
In June, the cartel agreed to increase supply to compensate for a drop in trade for Russian oil that month, after the European Union agreed to slash Russian crude imports by 90 per cent before the end of the year.
OPEC+ agreed to increase output by 648,000 barrels per day in July and August.
But, according to a Reuters survey earlier this week, many countries have fallen short of their pledges.
On Wednesday, OPEC said that many of its members’ production capacity was “severely limited” due to “chronic underinvestment in the oil sector.”
Meanwhile, TotalEnergies said the commencement of production from its Ikike field would help to bridge Nigeria’s oil production gap which had declined in recent times.
Managing director, TotalEnergies E&P Nigeria, Mike Sangster, made this known at the 2022 Society of Petroleum Engineers (SPE) Nigeria Annual International Conference and Exhibition (NAICE) in Lagos.
The Ikike project is a Joint Venture between TotalEnergies (40 per cent) and the Nigerian National Petroleum Company Ltd. (60 per cent).
Located 20 kilometres off the coast, at a depth of about 20 metres, the Ikike platform is tied back to the existing Amenam offshore facilities through a 14km multiphase pipeline.
Represented by Victor Bandele, deputy managing director, Deepwater, TotalEnergies E&P Nigeria, Sangster said the field would add 50,000 barrels per day to Nigeria’s oil production.
He said: “That kind of the project first is low capex, which is what Nigeria needs now. It is high profit, which is what Nigeria needs now and it’s helping to bridge the gap that we have caused by ourselves.
“Today, our OPEC quota is 1.8 million barrels, and we are producing less than 1.3 million. So, what for me is success is that we don’t waste the capacity that we should have as a country.
“When we are supposed to be producing 1.8 million barrels, we should do more than that and be able to take advantage of what we have today.”
Sangster called for more collaboration among operators in the sector to optimise cost and improve efficiency in their operations.
He said there was a need for the industry stakeholders to work with the government in addressing the current security challenges such as pipeline vandalism and oil theft that was affecting the sector.