Nigeria’s daily oil output of about 1.4 million barrels per day will rise to1.8 million barrels per day by April 2022. following the decision by member countries of the oil cartel, OPEC to increase oil output by an initial 400,000 barrels per day.
OPEC made the announcement via a statement in which it made the following resolutions:
Adjust upward their overall production by 0.4 mb/d on a monthly basis starting August 2021 up until phasing out the 5.8 mbpd production adjustment, and in December 2021 assess market developments and Participating Countries’ performance.
- Continue to adhere to the mechanism to hold monthly OPEC and non-OPEC Ministerial Meetings for the entire duration of the Declaration of Cooperation, to assess market conditions and decide on production level adjustments for the following month, endeavouring to end the production adjustment by the end of September 2022 subject to market conditions.
- Adjust, effective 1st May 2022, the baseline for the calculations of the production adjustments according to the attached table.
- Reiterate the critical importance of adhering to full conformity and taking advantage of the extension of the compensation period until the end of September 2021. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting.
This development gives Nigeria the opportunity to increase its daily output to 1.829 million barrels per day by April 2022, which would likely increase revenue for the Federal Government.
OPEC will at the commencement of the new arrangement grow output by an extra 400,000 barrels a daily each month beginning from next month, and in subsequent months of the year increase output by about a total of 2 million barrels per day in total, by the end of 2021. The monthly output increases will subsist until December 2022.
The new deal will allow the thirteen exporting nations in the OPEC to increase their production from 26,683 million barrels per day to 27,815 million barrels per day, while non-OPEC members under the new deal will increase their output from 17,170 to 17,670 million barrels per day. This will see the combined output of the OPEC+ member countries rise from 43,853 million barrels per day to 45,454 million barrels per day.
According to Nairametrics, a source at the Ministry of Petroleum Resources stated that despite this decision, Nigeria might not experience an increase in crude oil outputs.
“We do not immediately move from current levels to 1.8 million barrels per day. It’s gradual to clear the restricted volume before we rebase to the effective date of April 2022. We still need increased investment in the sector to keep up with the current levels much less ramp-up to higher levels,” he revealed, suggesting Nigeria still needs to attract investment in the sector to meet the new production quota.
The Federal Government has suffered a massive decline in its revenues since the crude oil cuts were agreed on last summer after oil prices fell to all-time lows. A combination of protracted low oil, waning demand and OPEC cuts sent the government’s actual revenues against target plummeting by over 27% in 2020.