Page 11 - Nigeriaone mag 2 edition en

Oil production between uncertainty and optimism

Oil well, illustrative image

The Energy Information Administration (EIA) has predicted an increase of the global demand for 2022 by 22
000 bpd and lowered its prediction for 2023 by 230 000 bpd. OPEC, in its June report release, maintained its
forecast that world oil demand would rise by 3.36 million barrels per day (bpd) in 2022. A mixt signal for the
oil and gas industry that will have a direct effect on African oil sector and more so on Africa first economies.
While Nigeria did not meet the quotas set by OPEC and is standing around 78% fulfillment, it is undeniable
that oil remains an important player in the economy. NNPC reported a N337.6 billion gross domestic crude
oil and gas revenue for the month of April and revenue from crude oil export of $14.70 million. Export
revenue received in April amounting to $29.94 million. In May 2022, the production of the top African oil
producer rose by 70 000 bpd to equal 1.42 million bpd.
When addressing the issue, Engr. Gbenga Komolafe of the Nigerian Upstream Petroleum Regulatory
Commission (NUPRC) attributed Nigerian low production level to the massive oil theft in the Niger Delta
region. “The country has the technical capacity to produce 2.3mbpd but it was producing 1.9 mbpd out of
which 1.35 mbpd was received at export terminals”. “While the Commission is prioritizing efforts towards
increasing oil and gas production and ensuring maximum economic recovery in Nigeria through the
optimization of the oil and gas value chain, there have been challenges limiting the country from making the
much-desired progress”.
He also stated “in the first Quarter of 2022, out of about 141 million barrels of oil produced and a total of
about 9 million barrels of oil was lost to crude oil theft. This amounts to a loss in Government revenue of
about 1 billion United States Dollars (at $116 per barrel) or about N434 billion (at CBN rate of N 415/$) which
is about 90% the size of Delta State’s budget of N479 billion for the 2022 fiscal year”.
In addition to theft, some serious security and environmental issues need to be addressed internally by
Nigeria while battling with the international forecasting of major oil and gas organizations, global economy,
and regional geopolitics.
These measures are very important especially in a year where we witnessed the high volatility of crude oil
barrel price. Timipre Sylva, Minister of Petroleum Resources, stated “Nigeria did not benefit from the spike
in price occasioned by the Russia-Ukraine war”. Speaking on Bloomberg Television, Sylva said that “Nigeria’s
comfort zone in terms of oil prices was between $70 and $80 per barrel”. “Nigeria was not gaining anything
from the soaring prices”.

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