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HomeBusinessCOVID-19: NNPC: 52m Crude Oil Barrels Lost to OPEC Cuts

COVID-19: NNPC: 52m Crude Oil Barrels Lost to OPEC Cuts

A data by the Nigerian National Petroleum Corporation (NNPC) has revealed how Nigeria lost at least 52 million barrels of crude oil between May and December 2020 to COVID-19-induced compulsory supply cuts imposed by the Organisation of Petroleum Exporting Countries (OPEC).

While Nigeria’s crude oil production level before the curbs was two million barrels per day (bpd), recent data from NNPC indicated that while the average daily crude oil production for the entire year stood at 1.775 million bpd, total production for the whole year was 704.741 million barrels.

In January, the country recorded the highest production level of 2.072 million bpd while last December, NNPC recorded its lowest production of 1.419 bpd.

On the average, the difference in production of crude oil between January and December, 2020, for instance was 652,967 barrels, that is, the highest and lowest production levels.

Although the document did not separate the quantity of crude oil produced from condensates, with a 225,000 bpd approximate under-production, at least 6.75 million bpd of crude oil was shut in to comply with the oil cartel’s agreement.

The figures showed that NNPC fulfilled its pledge to rev up production to hit its targeted three million litres, when the pandemic broke out, slashing average daily production to 1.74 million barrels in the first instance in May after the OPEC intervention.

In June, production further reduced to 1.68 million barrels per day on the average, 1.65 million bpd in July and 1.64 million bpd in August.

Following the virus-induced plunge in oil prices, OPEC and its allies known as OPEC+ in May last year, embarked on the largest coordinated oil production cut regime in history, agreeing to cut 9.7 million bpd in an effort to support the market, amounting to about 10 per cent of global oil supply.

However, according to the data from NNPC’s market and production activities, in September, oil drilling further dipped to 1.59 million bpd, but slightly increased to 1.61 million bpd in October before falling again in November to 1.54 million and tumbling in December to 1.419 million barrels.

In all, the Production Sharing Contracts (PSC) portion of the total national output took the lion’s share of oil drilled in 2020, hitting 281.1 million barrels of the total 704.7 million barrels of crude oil produced during the year.

The Joint Venture (JV) agreements yielded 226.5 million barrels, while the Alternative Financing (AF) sources resulted in the production of 75.2 million barrels.

In addition, the activities of the National Petroleum Development Company (NPDC), an NNPC subsidiary, yielded 72 million barrels in the year under consideration, while the independent marginal fields generated 49.6 million barrels in 2020.

The figures reflect the huge impact the outbreak of the virus had on the international oil market and the efforts by OPEC to curb output to rein in the falling prices, which early last year tumbled to about $10 for Brent, Nigeria’s benchmark, while West Texas Intermediate (WTO), America’s benchmark reeled in the negative territory.

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