Following the inability of Organisation of the Petroleum Exporting Countries (OPEC) to extend its present oil output cut, which expires on March 31, 2020, Nigeria will from April 1, 2020 increase its production by 500,000 barrels per day from its current 1.7 million barrels per day.
Nigeria is hoping to increase the daily production of crude and a light oil called condensate to 2.5 million barrels per day from the stipulated 2.2 million currently.
This was disclosed by the Minister of State for Petroleum Resources, Mr Timipre Sylva, in a recent interview with Bloomberg.
Recently, the national oil company, Nigerian National Petroleum Corporation (NNPC), reduced the official selling price of the country’s crude oil to record lows in order to find buyers for unsold April-loading cargoes before announcing its May programmes.
Recall that prices of the country’s crude grades, Bonny Light and Qua Iboe, were cut by $5 per barrel to allow for more buyers.
This is happening because oil prices are tanking globally due to a Saudi Arabia and Russia row over failure to agree to a proposed production cut during the OPEC+ meeting held earlier this month.
The proposal had been offered to stifle falling oil prices affected by the COVID-19 outbreak but the failure led Saudi Arabia to increase production and unleash cheap oil to the global market, leaving countries to fight for market share.
From April 1, Nigeria will join Saudi Arabia, Russia, United Arab Emirates, Iran, and major producers in increasing its production, adding to the oil glut.
With drop in demand due to travel restrictions placed by governments to combat the spread, less demand means more cheap oil in storage, and with higher production from next month even these storage are under threat of been filled up.
Speaking further in light of the oil price war between the OPEC de-facto leader and Russia, Mr Sylva said it was necessary to stabilise the market.
“It’s in our interests, collective interests, to ensure that we are able to stabilize the market.
“We are taking a very close look at all the production streams,” he added. “Anyone which is not producing profitably will be shut down,” he said.
