The Organisation of PetroleumExporting Countries (OPEC) and its allies, has agreed to cut global oil production by 1.393 million barrels per day, reducing Nigeria’s oil production quota by 20.7 per cent, BusinessDay reports.
Under the new production schedule agreed upon in the virtual meeting, Africa’s biggest economy will see its quota decrease to 1.380 million barrels per day from January to December 2024.
Nigeria’s expected output quotas for August, September, October, and November were 1.826 million bpd, 1.830 million bpd, 1.826 million bpd and 1.747 million bpd respectively.
However, Nigeria’s inability to meet previous quotas has shrunk dollar proceeds from oil sales. A significant amount of the country’s crude lies stranded as buyers turn to cheaper alternatives.
The drop in the oil production quota by OPEC would be a constraint on its oil production and exports, which can have implications for government revenue, budget planning, and overall economic stability, as oil is a major source of income for Nigeria.
Recent data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates that Nigeria’s crude oil production dropped to its lowest level in seven months, reaching 998,602 bpd in April this year. Analysts attribute this decline to critical export terminal outages.
Compared with February, the country’s oil production decreased by 23 per cent, falling from 1.3 million bpd. On a year-on-year basis, it experienced an 18 per cent dip from 1.21 million bpd. Consequently, Nigeria lost its status as Africa’s largest oil producer to Angola, as its oil output decline surpassed that of its OPEC peers in April.
During the oil market meeting held on June 4, 2023, in Vienna, the 13-member oil cartel agreed to adjust the level of overall crude oil production for OPEC and non-OPEC Participating Countries in the Declaration of Cooperation (DoC) to 40.46 million bpd, starting 1 January 2024 until 31 December 2024, which to be distributed as per the attached table.
The Kingdom of Saudi Arabia has taken a voluntary cut of 1 million bpd starting in July. According to reports from the meeting, the voluntary cut of an additional 1 million bpd in July (for one month and can be extended) will extend the 500,000 voluntary cuts till the end of 2024.
Also, The UAE said it will extend its voluntary cut of 144,000 bpd until the end of December 2024, as a precautionary measure, in coordination with the countries participating in the OPEC Plus agreement, which had previously announced voluntary cuts in April.
According to a statement by OPEC, the required production level for Congo and Nigeria may be updated to equal the average production that can be achieved in 2024, as assessed by IHS, Wood Mackenzie, and Rystad Energy) specialised in oil upstream by the next ONOMM to be held by the end of 2023.
“Nigeria’s stated Production Plan in 2024 is 1,578,000 bpd subject to verification, and if verified then the number will be reflected as required production for 2024,” OPEC said.
“This level was the required production level for the month of February 2023, as assessed by the average of the secondary sources, and is subject to revision by June 2023 as the country is currently working with the secondary sources to update production figures.”