OPEC Gives Condition for Nigeria’s Oil Production Quota Increase

The Organisation of Petroleum Exporting Countries (OPEC) yesterday maintained that no country, including Nigeria, which has under-performed in meeting its monthly oil quota allocation would have its baseline increased.

The oil producers’ group insisted that it beats common logic that Nigeria which has consistently failed to meet its quota in the last couple of months, would be asking for an increase when it was obvious that the country was having challenges pumping its portion of the liquid.

A source at OPEC Secretariat, Vienna, told newsmen that Nigeria had not met the condition which would warrant an increase in its baseline and by extension its monthly quota, noting that until that requirement is met, it will be difficult to mull a production hike.

“The current supply adjustment, Nigeria has not met it. It is when it is exhausted that request for increase will arise,” the top OPEC source stated.

Despite requesting for a higher baseline in August, Nigeria has failed to meet the existing crude oil supply quota allocated to it by OPEC, underperforming by 90,000 barrels per day (bpd) in August, or roughly 2.8 million barrels during the month. This made its production of 1.43 million bpd one of the lowest in five years.

In same month, Nigeria, which potentially has the capacity to produce two million bpd, other things being equal, slumped from its July figure of 1.520 million bpd, according to an OPEC document obtained by newsmen.

Aside infrastructure challenges and technical difficulties, leading to shut-ins, there have also been instances of community or workers’ protests, which incessantly disrupt operations, leading to severe losses. Nigeria further under-supplied to the tune of about 114,000 bpd daily in September.

Newsmen had reported that the Nigerian National Petroleum Corporation (NNPC) and its partners lost 6.035 million barrels of crude oil to emergency shutdowns in August in 32 such incidents throughout its facilities in the country. A breakdown of the losses, according to the document, indicated that the highest combined shortage of 1.62 million barrels was from Qua Iboe, with 200,000 barrels due to production shut-in arising from flare management and low wellhead pressure.

A month later, the losses increased to 7.193 million barrels, the highest in months, mostly as a result of shut-ins due to incessant repairs as well as, to a lesser extent, disruptions arising from community workers’ protests and fire incidents.

The Minister of State Petroleum, Chief Timipre Sylva and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) , Mallam Mele Kyari, recently projected that by the end of October or mid-November, things would return to normal.

Analysts have pinned the problem down to waning investment and nagging maintenance problems which continue to hobble Nigeria’s output as a consequence of several shutdowns, with the latest disruptions happening in 40 incidences.

Meanwhile, as oil prices push above $80 per barrel and fears over the global energy crunch grow, OPEC has dismissed insinuations by some observers that the coalition isn’t doing enough to steady the market.

Secretary-General of the organisation, Dr Sanusi Barkindo, told critics that the blame was elsewhere, explaining that the turmoil spreading from natural gas markets shows that the energy transition is impeding vital investment in supply.

Speaking at the Energy Intelligence Forum yesterday, Barkindo said the mishandling of the energy transition was beginning to have a negative impact on the industry, noting that the process could be better handled than is currently being done.

“The energy transition is not being handled properly. And hence we are beginning to see the fall-out,” Barkindo said at the event.

Barkindo argued that the group’s decision this week to increase supplies gradually , like last year’s agreement to cut output during the pandemic, showed its committed to a sustainable market balance.

He maintained that the fundamental problem in the energy sector lies with the ‘hysteria’ that has gripped thinking on the move away from fossil fuels, shrinking much-needed investment, even in developing countries.

The OPEC helmsman added: “We call on the leading polluters, the leader emitters to pause and work on sustainable solutions when they gather for the next round of climate talks in Glasgow next month.”