Nigeria’s crude oil production hits 2.2mbpd

Prices fluctuate to $37.57 per barrel

THE Federal Government has put the country’s crude oil production for October at 2.2 million barrels per day (mbpd). This represents an increase of 4.16 per cent relative to August output.

Besides, the price of Brent crude oil, the international benchmark, fell by 88 cents at $37.57 while West Texas Intermediate declined by 0.8 per cent to $37.

Brent had earlier increased yesterday morning by 1.38 per cent to $38.45 and WTI by 2.78 per cent to $37.35 before the current decline. The Federal Government pegged crude oil benchmark at $38 per barrel in the 2016 budget proposal.

The oil price has been in recovery mode in recent days. After hitting post-crisis low of close to $36 a barrel on Monday, it has since rallied and at one point yesterday, was back above $38 a barrel.

Nigeria, which had pegged crude oil benchmark at $52 to run the 2015 budget, had difficulties in meeting the financial needs in the country. The country went further to cut the oil benchmark to $38, but needs about $125 a barrel price to effectively finance the 2016 budget.

This increase in production, which is still below the country’s targeted 2.4 mbpd, came as world oil prices hit their highest lowest level in 11 years.

Though, Nigeria has managed to meet its Organisation of Petroleum Exporting Countries (OPEC)’s quota of 2.2mbpd, the latest development in the country is helping to boost the global oil surplus, which experts believed would persist at least until late 2016 as demand growth slows.

Already, in November, about 10 November cargoes were still not sold in addition to about 62 cargoes for December’s loading schedule.

Production from OPEC 12 members rose by 50,000 barrels a day to 31.73 million a day in November, the highest in two months.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said during an interactive session with members of the National Assembly in Abuja in a presentation with the theme “The Roadmap for Nigeria’s Oil and Gas Sector|”, that the average national oil production as at July 2015 stood at 2.1 million barrels per day and the Nigerian Petroleum Development Company (NPDC) equity production is 99,000 barrels per day.

According to him, the declining joint venture reserves were due to inadequate and low investment in the oil assets, stressing that the issue of funding constraints must be addressed going forward with the collaboration of private and international investors.

He put the average gas-to-power generation at about 3,000 megawatts and domestic gas supply of one billion standard cubic feet (scf) with the contribution of 600 million standard cubic feet from NPDC.

On the current state of the refineries, Kachikwu stated that from the available reports before him, two of the refineries may be re-streamed before the end of December, 2015 adding that efforts were on to engage private investors to build new refineries within the old ones, to enable the facilities to share power, pipelines and other resources.

He stressed that the new agenda for the oil and gas industry was centered on having the right people, doing the right things, at the right time, for the right purpose to yield the right results.

Kachikwu stated that the petroleum sector on his watch would ensure that the Nigeria content policy would transform the oil and gas industry into the economic engine for job creation and national growth.

Kachikwu said he was obliged to cancel the Offshore Processing Agreements (OPAs), crude-for-products-exchange arrangement (popularly known swap) and other unprofitable product and crude arrangements all in a bid to avoid rent-seekers and add value to the Nigerian hydrocarbon resources.

On the downstream sector, Kachikwu advocates the introduction of a private sector model that would reinvigorate the efficient supply and distribution of petroleum products especially in the area of pipeline assets.

He said the menace of pipeline vandalism had led to huge losses of crude and petroleum products, adding that 27, 967 incidents of pipeline vandalism were recorded in the last few years. He noted that unutilised pipelines and poor pipeline integrity also led to high cost of trucking and impact on the roads.