BY BRIGHT JACOB
Nigeria produced 1.18 million barrels a day of crude in August, up from a revised 1.09 million barrels a day in July, according to data from the Nigerian Upstream Petroleum Regulatory Commission.
That’s nearly 600,000 barrels below its OPEC quota of 1.7 million barrels a day, which it has been unable to meet this year.
The data revealed that Nigeria’s revenue from sale of crude oil (excluding condensates) increased by N188.7bn in August 2023, following a marginal gain in the production of the commodity by both international and indigenous operators in the sector.
It was observed that in August, Nigeria pumped a total of 36,615,125 barrels of crude oil (excluding condensates), which was higher than the 33,761,767 barrels produced in the preceding month of July.
This showed that oil production in August was higher than what was produced in July by 2,853,358 barrels.
Data from the World Bank showed that the average cost of Brent, the global benchmark for crude, in August 2023 was $86.16/barrel.
Also, figures from Exchange Rates UK, a global analytical firm, put the average exchange rate of the United States dollar in Nigeria in August at N767.6.
Therefore, by producing an additional 2,853,358 barrels of crude oil in August, Nigeria’s oil earnings rose by about N188.71bn in the review period.
On daily production figures for crude, OPEC stated that oil output from Nigeria increased to 1.181 million barrels per day in August this year.
In its just released monthly oil market report for September 2023, the global oil cartel said oil production in Nigeria rose from 1.081mbpd in July to 1.181mbpd in August.
The country had produced 1.18mbpd in May, which was higher than the 0.99mbpd production figure recorded in the preceding month of April.
Data from the OPEC report, however, showed that though the country’s oil output appreciated in August, it was still lower than the 1.249mbpd recorded in June this year.
“This showed that oil production in August was higher than what was produced in July by 2,853,358 barrels”
A further analysis of the report indicated that the country pumped an average of 1.144mbpd in the second quarter of 2023, which was lower than the 1.277mbpd output recorded in the preceding quarter.
Nigeria’s oil output had been nose-diving lately, despite the marginal rise in August.
Nigeria, among Africa’s largest producers of crude oil, will need to raise production by at least 300,000 to 400,000 barrels a day to meet President Bola Tinubu’s aggressive target of achieving 6% economic growth from next year.
That’s according to Bank of America sub-Saharan Africa Economist Tatonga Rusike, who said that restoring crude output to levels last achieved in 2014 could prove tough.
“The target is ambitious as long as we continue to see oil production below 1.3 million barrels a day,” he said in an interview last week, noting that the revenue generated by Nigerian oil provides an important economic support.
Nigeria’s economy grew 2.5% in the three months through June from a year earlier, compared with 2.3% in the prior quarter after the oil sector contracted for a 13th straight quarter.
The country has suffered two economic recessions since 2015, with growth averaging 1.1% over the period.
Tinubu, who took office in May, pledged to raise the growth rate to 6% or more and has initiated sweeping reforms to boost the economy, including ending costly energy subsidies, relaxing the exchange-rate regime and overhauling the country’s tax system to lift revenues.
The chairman of the Nigerian Economic Summit Group, Olaniyi Yusuf, said that Tinubu’s growth goal was achievable — if the energy sector steps up.
“Our sense is that the greatest lever for us is crude oil,” he said in a separate interview, arguing that if the country can advance oil production to 1.6 million barrels a day, economic growth “will do up to 6% sustainably.”
Still, Nigeria’s persistently low oil production is a headwind and Bank of America has cut its growth forecast for Africa’s most populous country to 2.5% this year from an initial estimate of 3%.
“An increase in crude oil production to 1.6 million barrels a day could take growth to 4%,” Rusike said. But he cautioned that hitting that level of production is unlikely “unless there is a new field, or an old field that was not producing is reactivated.”
“Positive reform momentum should influence economic performance for the rest of the year and into 2024,” he said.
The Executive Secretary, Major Oil Marketers Association of Nigeria, Clement Isong, had also called on the Federal Government to work hard and stop crude oil theft.
He said oil theft was not only stopping Nigeria from meeting its production quota as approved by OPEC, but was denying the country a lot of dollars required for the imports of goods.