Oil Price Climbs To $92p/b As Nigeria Battles Theft

Data obtained from the Organization of the Petroleum Exporting Countries (OPEC) has shown that Nigeria’s oil production for August rose to 1.1 million barrels per day from 1 million b/d in July.

Oil price climbed to $92.28 per barrel early Wednesday, but Nigeria would not be maximising the rise as it continues to produce below its Organisation of the Petroleum Exporting Countries’ quota.

Brent Crude was sold for $91 on Tuesday, but rose on the back of renewed pledge by Saudi Arabia and Russia to further cut their output by 1.3 million barrels until the end of the year.

The Nigerian Upstream Petroleum Regulatory Commission also recently put the country’s production for August at 1.4mb/d, including condensate of 400,000b/d.

Although the country’s oil reserves are estimated at 38bb/d, it has been unable to increase its daily oil production due to crude oil theft.

The Nigerian National Petroleum Company Limited has, in the past few months, reported weekly crude oil theft incidents across the oil-producing states.

According to National Security Adviser, Nuhu Ribadu, the country loses 400,000 barrels of oil daily.

In February, Nigeria produced 1.2mb/d and peaked at 1.5mb/d in March before dipping to 1.004mb/d in April.

The activities of oil thieves crashed the country’s output to around 900,000b/d in September last year.

The country has been unable to meet its OPEC production quota of 1.7mb/d, though it has a budget benchmark of 1.69m/d for 2023.

The country’s inability to ramp up production has inhibited its revenue as it relies on crude oil exports for about 80 per cent of government earnings and over 90 per cent of its foreign exchange.

Due to its low oil production output, the removal of petrol subsidy and floating of the local currency, the country’s inflation rate hit a 18-year high in July of 24.1 per cent from 22.8 per cent in the previous month.

The oil sector has also been grappling with low investments, as oil majors divested in pursuit of cleaner energies.

Due the low output, OPEC noted Nigeria had lost its position as Africa’s largest oil producer with 1.18mb/d output to Libya (1.19 million) in August. Other top producers in the continent in the month were Angola (1.12 million), and Algeria (939,000).

The Chairman of Society of Petroleum Engineers Nigeria Council, Felix Obike, while briefing journalists on the 2023 SPE conference; said crude oil exports would continue to dwindle until FG addresses the security of pipelines.

According to him, although exploration for more oil is ongoing, many oil firms are no longer transporting their oil for exports.

“The oil is there and we are currently exploring, but a lot of companies are not transporting their crude oil for exports due to insecurity challenges disturbing movement of oil,” he said.