Indications have emerged that Nigeria may not benefit from the projected rise in crude oil price at the international market as output drops to 295 million barrels in 5 months.
The United States Energy Information Administration, EIA, projected a negative downturn for the country’s crude oil production growth in 2016, signalling that Nigeria may be left out of enjoying the fortune resulting from the projected rise in the price of crude oil at the international market above USD50 per barrel,
The report is coming as a data from the Nigerian National Petroleum Corporation, NNPC, indicated a steady decline in output since January with the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, stressing the gloomy picture of Nigeria amidst the international price recovery.
Nigeria’s crude oil production in the five months to May 2016 dropped to 295.09 million barrels, showing a shortfall of 36.15 million barrels or 10.91 per cent from 331.24 million barrels recorded in the preceding five months of August-December, 2015
. The January-May 2016 output translated to an average daily crude oil output of 1.97 million barrels per day (mbpd), according to data released by the Nigerian National Petroleum Corporation, NNPC. The output level reflected the impact of production shut-ins following increased militancy siege on oil installations.
However, with interim reports showing further declines in output in the months of June to date, subsequent data from NNPC would reflect a further drop in cumulative production level, which would also mean increased cost of militancy to the government.
United States’ Energy Information Administration, EIA, had put the average crude oil price for the first five months of 2016 at USD37.882 per barrel, compared to an average of USD44.97 per barrel in the last five months of 2015.
This meant that Nigeria earned about USD11.18 billion in the first five months of 2016, an equivalent of N2.2 trillion, using the official exchange rate of N197 to a dollar as at that period. Month-on-month analysis of the country’s crude oil output showed a steady decline since January this year.
January 2016 output was 66.49 million barrels which translated to an average of 2.22 million barrels per day, while in February, 59.27 million barrels was produced, giving an average of 1.98 million barrels per day. In March, April and May 2016, 57.43 million, 59.56 million and 52.34 million barrels were produced, translating to a daily average of 1.91 million, 1.99 million and 1.74 million barrels respectively.
EIA data indicates that Nigerian oil production would remain depressed through 2017 as a result of militant attacks. The data also indicated that despite the discordant tone over possible agreement on production cut back by OPEC members as they meet next month, oil prices would rebound beyond USD50 per barrel in the weeks ahead. Factors helping the rebound would include production set-backs in Nigeria due to militancy.
