Nigeria’s federal government said it has accepted to cut its crude oil production in line with the proposal of the Organisation of Petroleum Exporting Countries (OPEC) and its OPEC+ counterparts to reduce production in bid to rebalance and stabilise the global oil market.
According to the government, the country’s crude production for the month of May and June will now be 1.412 million barrels per day, but it will rise to 1.495 barrels between between July and December 2020, before production will increase to 1.579 barrels from January 2021 to April 2022.
The country’s current production capacity is 2.3 million barrels per day.
Minister of State, Petroleum, Mr. Timipre Sylva who announced the cut in a statement on Friday, expressed confidence that the move will lead to a rebound in the price of the commodity by at least $15 per barrel in the short term.
“Nigeria joined OPEC+ to cut supply by up to Ten (10) Million Barrels per day between May and June 2020, Eight (8) Million Barrels per day between July and December 2020 and Six (6) Million barrels per day from January 2021 to April 2022, respectively,” he said.
“Based on reference production of Nigeria of October 2018 of 1.829 Million Barrels per day of dry crude oil, Nigeria will now be producing 1.412 Million Barrels per day, 1.495 Million Barrels per day and 1.579 Million Barrels per day respectively for the corresponding periods in the agreement. This is in addition to condensate production of between 360 and 460 KBOPD of which are exempt from OPEC curtailment.”
The minister said “It is expected that this historic intervention when concluded will see crude oil prices rebound by at least $15 per barrel in the short term, thereby enhancing the prospect of exceeding Nigeria’s adjusted budget estimate that is currently rebased at $30 per barrel and crude oil production of 1.7 Million Barrels per day. The price rebound may translate to additional revenues of not less than $2.8 Billion Dollars for the Federation.
“It is therefore pleasing to note that despite the production curtailments that this historic agreement will entail, all planned industry development projects will progress as they will be delivered after the termination of the 9th OPEC/Non-OPEC Ministerial Meeting Agreement on adjustments in April 2022.”