Nigeria has failed to meet the crude oil production quota approved by the Organisation of Petroleum Exporting Countries throughout 2022 and 2023, and has also been unable to meet those approved since January 2024, Saturday PUNCH can confirm.
The inability of the nation to meet its approved OPEC quota has also been confirmed as a major factor worsening the crude oil supply crisis for indigenous refiners, according to data obtained from the Nigerian Upstream Petroleum Regulatory Commission, an agency of the Federal Government.
OPEC is an intergovernmental organisation that enables the cooperation of leading oil-producing and oil-dependent countries to influence the global oil market and maximise profit collectively.
However, refineries in Nigeria, including the $20bn Dangote Petroleum Refinery, as well as modular refineries, have been lamenting the lack of adequate supply of crude required for the production of refined products, such as premium motor spirit, popularly called petrol; automotive gas oil or diesel, and JetA1, otherwise called aviation fuel, among others.
The refineries have at various times called on the Federal Government to work with international oil companies to ramp up Nigeria’s crude oil production, stressing that the lack of crude remained a disincentive to investors, particularly those interested in modular refineries.
However, data from the Nigerian Upstream Petroleum Regulatory Commission indicated that crude oil theft, pipeline vandalism, and force majeure at two key terminals, among other factors, stopped the country from meeting various OPEC oil production quotas. These factors, the data revealed, are also making it tough to get crude to local refineries.
A report by OPEC in May stated that Nigeria’s daily oil production dipped to 1.25 million barrels per day. According to the PUNCH, OPEC data showed that Nigeria lost 30,000 bpd, as crude production dropped from 1.28 mbpd in April to 1.25 mbpd in May.
This was despite the claim by the Federal Government and the Nigerian National Petroleum Company Limited that the country’s oil production rose to 1.7 mbpd.
The PUNCH had reported earlier that Nigeria’s dwindling daily oil production turned the corner in April, rising marginally from 1.23 million barrels per day in March to 1.28 mbpd, according to OPEC.
In the NUPRC report obtained by Saturday PUNCH in Abuja, the commission’s Chief Executive Officer, Gbenga Komolafe, outlined the crude oil production quotas (excluding condensates) approved by OPEC for Nigeria from 2022, 2023 until May 2024.
According to him, in 2022, the approved quotas for January, February, March, April, May, and June were 1.682 million barrels per day; 1.701 mbpd, 1.718 mbpd, 1.735 mbpd, 1.753 mbpd, and 1.722 mbpd respectively.
In July, August, September, October, November, and December of the same year, the approved quotas were 1.799 mbpd, 1.826 mbpd, 1.830 mbpd, 1.826 mbpd, 1.742 mbpd, and 1.742 mbpd respectively.
But, figures from NUPRC on Nigeria’s actual oil production during the same period showed that in January, February, March, April, May, and June, the country produced 1.398 mbpd, 1.258 mbpd, 1.237 mbpd, 1.219 mbpd, 1.024 mbpd, and 1.158 mbpd respectively.
For July, August, September, October, November, and December 2022, the country’s oil outputs were 1.083 mbpd, 0.972 mbpd, 0.937 mbpd, 1.014 mbpd, 1.185 mbpd, and 1.235 mbpd respectively.
He said all the above monthly crude oil production figures were far less than the approved monthly quotas for Nigeria by OPEC in 2022.
He disclosed further that in 2023, OPEC maintained an approved crude oil production quota of 1.742 mbpd for Nigeria all through the 12 months.
However, the NUPRC data revealed that the country’s actual oil production figures during the period in 2023 were 1.267 mbpd, 1.292 mbpd, 1.266 mbpd, 1.004 mbpd, 1.189 mbpd, and 1.260 mbpd for January, February, March, April, May, and June respectively.
For July, August, September, October, November, and December 2023, Nigeria produced 1.089 mbpd, 1.181 mbpd, 1.346 mbpd, 1.350 mbpd, 1.250 mbpd, and 1.335 mbpd respectively.
Again, all the above actual crude oil production figures were far less than the monthly quotas approved by the global oil cartel for Nigeria in 2023, the data revealed.
NUPRC further stated that in 2024, OPEC had to reduce its monthly oil production quota for Nigeria, as it dropped the quota to another flat rate of 1.5 mbpd from January to May this year.
However, despite the reduction in the approved monthly oil production quota from the group, Nigeria still failed to meet the reduced volume all through the the first five months of this year.
In January, February, March, April, and May 2024, Nigeria produced 1.426 mbpd, 1.322 mbpd, 1.230 mbpd, 1.282 mbpd, and 1.251 mbpd respectively.
Refiners lament
Nigeria’s abysmal oil output has been a source of concern not just for government officials, but also to crude oil refiners, particularly the Dangote Petroleum Refinery and modular refineries, as they have been lamenting the lack of access to crude oil.
Operators under the aegis of the Crude Oil Refinery Owners Association of Nigeria decried Nigeria’s inability to meet its OPEC quotas since 2022.
Speaking with our correspondent, the Publicity Secretary of CORAN, Eche Idoko, said, “Local refiners should be given priority before the crude we produce in-country is exported to other refineries outside Nigeria. Charity, they say, begins at home. We know that the country is not meeting the OPEC quota, but that shouldn’t stop crude supply to the Dangote refinery and modular refineries.”
Recall also that the Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, recently accused international oil companies in Nigeria of plans to frustrate the survival of the new Dangote Petroleum Refinery.
Edwin said the IOCs were deliberately frustrating the refinery’s efforts to buy local crude by hiking the cost above the market price, thereby forcing the refinery to import the natural resource which Nigeria is rich in.
“It seems the IOCs’ objective is to ensure that our petroleum refinery fails. They either deliberately ask for a ridiculous/humongous premium, or they simply state that crude is not available. At some point, we paid $6 over and above the market price. This has forced us to reduce our output as well as import crude from countries as far as the United States of America, increasing our cost of production.
“It appears that the objective of the IOCs is to ensure that Nigeria remains a country which exports crude oil and imports refined petroleum products. They (IOCs) are keen on exporting the raw materials to their home countries, creating employment and wealth for their countries, adding to their Gross Domestic Product, and dumping the expensive refined products on Nigeria, thus making us dependent on imported products. It is the same strategy the multinationals have been adopting in every commodity, making Nigeria and Sub-Saharan Africa face unemployment and poverty. At the same time, they create wealth for themselves at our expense.
“This is exploitation- pure and simple. Unfortunately, the country is also playing into their hands by continuing to issue import licences at the expense of our economy and the cost of the health of Nigerians exposed to carcinogenic products,” the Dangote official stated.
However, oil sector operators said the position of the Dangote refinery official may not be entirely correct, noting that the country was struggling to meet its already contracted supply obligations to global traders, and had been falling short of the quotas approved by OPEC.
“A good percentage of Nigeria’s crude has been contracted to international companies or used for the collection of loans. You are aware of the over $3bn crude-for-cash loan collected by NNPC from Afreximbank. That loan is to be repaid using crude, while we don’t produce enough crude.
“The solution is to increase oil production significantly,” an official of the Federal Ministry of Petroleum Resources, who spoke on the condition of anonymity due to a lack of authorisation to speak on the matter, stated.
The position of the FMPR official was earlier highlighted by the Independent Petroleum Producers Group, as it stated that Nigeria should be producing about 2.5 million barrels of crude oil daily to meet the demand of local refineries as well as that of exports.
In a similar vein, the Chairman of IPPG, Abdulrazaq Isa, while speaking at the just concluded Nigeria Oil and Gas conference in Abuja, said, “It is imperative to grow our daily production to 2.5 million barrels of oil and 10 bcf (billion cubic feet) of gas in the near to long term to ensure we can meet our domestic refinery and petrochemical demands and export commitments to generate the much-needed foreign exchange earnings for macro-economic stability.”
‘Oil theft remains major challenge’
Also speaking with Saturday PUNCH, the Principal and Chief Executive Officer of the Petroleum Training Institute, Warri, Delta State, Dr Henry Adimula, said that oil theft remained a major factor preventing Nigeria from meeting the oil quota requirement from OPEC.
Adimula noted that the country could achieve 2.6 million barrels per day with the ongoing efforts of the Federal Government, which include the recent inauguration of the Presidential Economic Coordination Council.
The PTI boss said disturbances in the oil-rich Niger Delta area by militants had perpetually affected the quota.
Adimula said, “There are efforts by the government all along to boost the nation’s oil capacity. Certainly, there have been a number of challenges, and one of the greatest threats or challenges to this, in my knowledge, has been oil theft. That has affected whatever might have resulted in the low production of oil. So, that’s the major problem.
“But, I know there have been major efforts by the Federal Government to curb that. And, I believe when these efforts of the government begin to yield fruit, especially with the construction of infrastructure, and with the inauguration of the Presidential Economic Coordination Council, we can achieve the target of 2.6 million barrels per day.
“I believe the concerted efforts of the government will achieve that. If we can curb the restiveness in the Niger Delta region causing oil theft, which I believe is the primary threat, then we can boost oil production.
‘Address insecurity’
Also speaking with our correspondent, the Chairman of the Partners for Petroleum and Energy Sector Prosperity Initiative, Charles Ibiang, said what could be done to help the oil industry and improve the production output was to address insecurity in the oil and gas sector, and seriously deal with crude oil theft, which has led to pipeline vandalism and disruption of the production process.
“What is being stolen in our oil production process is alarming, and that is why multinationals are leaving. The government must tackle the issue of insecurity immediately. The government must declare a state of emergency in the oil and gas sector to address theft and pipeline vandalism.
FG to improve security architecture
The Federal Government, however, assured investors and other operators in the sector that efforts were ongoing to halt the oil production decline, as it had deployed security measures to address the concern.
It also gave reasons for the persistent failure to meet the crude oil production quotas approved by OPEC.
Outlining the reasons, the NUPRC boss said, “The production profile is below the OPEC quota due to the following: crude oil theft, pipeline vandalism, and the proliferation of artisanal refineries, especially in the Eastern Delta;
“Force majeure at Bonny and Brass Terminals leading to a deferment of about 200,000 barrels of oil per day.” In law, a force majeure is an unforeseeable circumstance that prevents someone from fulfilling a contract.
On measures to address the inability to meet Nigeria’s OPEC-approved quotas, Komolafe said the government has commenced the “deployment of new security architecture in the eastern, central, and western production corridors to help restore and guarantee production. (Punch)
