Despite the rise in crude oil prices above $75 per barrel at the International market, there are indications that Nigeria crude oil production may have recorded a decline by 7,000 bpd of 1.48 million bpd in June against 1.55 million bpd in that of May.
This is despite the positive rise in the combine oil output from the Organisation of the Petroleum Exporting Countries for June.
The group, known as OPEC+, added 540,000 barrels per day of crude in June to a market hungry for oil as summer kicked off, according to the latest S&P Global Platts survey.
According to the report, Nigeria produced 1.48 million bpd in June, its lowest level since January, compared to 1.55 million bpd in May, the survey found.
Some of the country’s large oil fields, especially those in the Niger Delta like Bonny, Escravos, Brass River and Qua Iboe, were said to be pumping well below their full capacity due to either technical problems or maintenance.
“OPEC’s 13 members pumped 26.19 million bpd in June, up 480,000 bpd from May, mostly due to Saudi Arabia’s continued unwinding of its voluntary extra production cut.
“The group’s nine non-OPEC partners, led by Russia, produced 13.27 million bpd, a rise of 60,000 bpd from May.
Despite the production gains, higher quotas for the month meant OPEC+ compliance was at 110.16 per cent compared to 111.45 per cent in May, the survey found.
The coalition has added 970,000 bpd in the past two months, as parts of its plans to relax its output quotas to meet the growing demand for its oil.
But a bitter feud between emerging rivals Saudi Arabia and the UAE could put an end to that, with a deal to raise output by two million bpd between August and December in jeopardy, according to S&P Global Platts.
The report said the dispute, which a week of negotiations had so far failed to resolve, could cause the OPEC+ alliance to leave quotas flat after July, potentially squeezing an already tightening market through the rest of the summer.
However, experts of the industry, have expressed optimism in the petroleum industry as price of crude continues to see upward turn.
For President, Nigerian Association for Energy Economics, NAEE, Prof. Yinka Omorogbe, the urgent need to shift from crude may not have come at a better time.
She said, “First of all Nigeria has to move from its concentration on crude oil sales as the major source of revenue. We are also one of the world’s largest importers of products. These two factors create a wasteful tension, worsened by subsidy payments.
“Diversification is key and therefore the government should work on sound policy and legal frameworks that stimulate growth and activity in other sectors of the economy. A key pillar of these framework should be the imperative of domestic needs being prioritised so that we can truly develop.
“It should encourage and grow the private sector by creating an attractive investment environment for foreign and Nigerian investors, in all sectors. Without our domestic energy needs being met, and a strengthened private sector, we will continue to have huge development challenges.”
She, however, said, “The high price is good because the government gets more money for its crude, and bad because importers pay more for their products. Who wins?”
Also, a petroleum expert and analyst, Prof. Wumi Iledare, called for financial discipline from the part of the federal government as crude prices soars. He said, “The increase in crude oil prices at the International market is a good for any economy and for Nigeria, of course, more revenue is certainly good for the country. I just hope it does not lead to fiscal irresponsibility.”