June 14, (THEWILL)- Nigeria’s crude oil production output hit record low levels in May, the June Monthly Oil Market Report (MOMR) of the Organisation of Petroleum Exporting Countries (OPEC), has shown.
The monthly report indicated that in the first quarter of 2021, Nigeria’s average production was 1.410 million barrels per day.
April production stood at 1.460mbpd and it was 1.388 barrels per day in May, leading to the loss of 72,000 daily barrels during the month.
But based on direct communication with OPEC, the cartel put the figure at 1.429 million barrels per day in March, 1.372 barrels per day in April and 1.344 mbpd in May, resulting in a shortage of 28,000 barrels between April and May.
It wasn’t immediately clear why production has remained low even after the countey announced earlier in the year that it had fully complied with the OPEC cuts after defaulting initially and the cartel’s decision to gradually open the taps since April.
Nigeria’s average crude oil production based on secondary sources was 1.78 Mbpd in 2019 and 1.57mbpd in 2020, while total OPEC 13-member crude oil production averaged 25.46 mb/d during May.
“In May 2021, production was up by 0.39 mb/d m-o-m. Crude oil output increased mainly in Saudi Arabia, Venezuela and Iran, while production decreased primarily in Nigeria and Angola,” OPEC said.
In terms of oil rig count, Nigeria’s total was 13 in 2018, 16 in 2019 and 11 in 2020, according to the report, but the number of operational rigs fell to five in April and rose by one to six rigs last month.
The OPEC report showed that Africa’s demand for crude oil was 3.43 million bpd in 2019, which fell to a 4.37million bpd in Q1, 2020. It further fell to 3.76 million bpd in Q2,2020, was 3.94 mbpd in Q3,2020 and 4.27 mbpd in Q4, 2020.
The MOMR indicated that Nigeria’s real Gross Domestic Product (GDP) advanced 0.5 per cent y-o-y in Q1, 2021, following a 0.1 per cent y-o-y rise in the last quarter of 2021.
It said the country registered the second consecutive quarterly growth since Nigeria’s economy faced recession in the third quarter of 2020, amid the easing of COVID-19 restrictions and an improvement in oil prices.
OPEC added: “Non-oil sector expanded 0.8 per cent y-o-y in 1Q21 following a 1.7 per cent y-o-y growth in 4Q20. The current growth was powered by the agriculture sector, which expanded by 2.3 per cent y-o-y.
“Industrial activity moved back into growth of 0.9 per cent y-o-y, after dropping by 5.6 per cent on average in 2020. Moreover, the annual inflation rate declined to 18.12 per cent in April 2021, from a four-year high of 18.17 per cent in March, but producer inflation accelerated to a significantly high level, amid raw material shortages and unfavourable exchange rate depreciation.”
The report said Nigeria’s business sentiment remained optimistic, driven by the current expansion in manufacturing operations as well as higher oil prices.
But OPEC stuck to its prediction of a strong world oil demand recovery in 2021 led by the United States and China despite uncertainties stemming from the pandemic, pointing to a need for more oil from the producer group.
The cartel said demand would rise by 6.6 per cent or 5.95 million barrels per day this year, remaining unchanged for a second consecutive month, despite a slower-than-expected recovery in the first half of this year.
“Global economic recovery has been delayed due to the resurgence of COVID-19 infections and renewed lockdowns in key economies, including the Eurozone, Japan and India.
“Overall, the recovery in global economic growth, and hence oil demand is expected to gain momentum in the second half,” OPEC said in the monthly report.
The cartel stated that it sees 2021 world economic growth at 5.5 per cent, unchanged from last month, assuming the impact of the pandemic will have been “largely contained” by the beginning of the second half.
“The ongoing vaccination efforts, a growing share of recovered cases leading to increasing herd immunity, and the easing of lockdown restrictions lend optimism that the pandemic could be contained in the few months to come,” OPEC said.
In April, OPEC and its allies, known as OPEC, had agreed to gradually ease oil output cuts from May to July and confirmed the decision at a meeting on June 1.
The report showed higher OPEC oil output, reflecting the decision to pump more and gain from Iran, which is exempted from making voluntary cuts due to U.S. sanctions, increasing May output to 390,000 bpd to hit 25.46 million daily production from the oil cartel.