Nigeria rebalances OPEC quota compliance, cuts output by 7%

By Udeme Akpan

NIGERIA has been forced to rebalance its oil output, effecting about 7.0 percent cut back on its oil output to re-align with the quota imposed by the Organisation of Petroleum Exporting Countries, OPEC.

The nation’s output in the month of April was put at 1.372 million barrels per day, mb/d, short of the 1.4 mb/d OPEC allocation.

The output count which excludes condensates, shows a 7.0 percent drop which was equivalent of the 7.0 percent over-production recorded in the previous month at 1.429 mb/d.

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However, the April 2021 output was a huge drop from the 1.793 mb/d in the corresponding period of 2020, indicating a 23.1 percent decline, according to OPEC’s May 2021 report released yesterday.

However, when data obtained from secondary sources are considered, it maintained that the output increased to 1.548 mb/d in April 2021 from 1.473 bp/d recorded in March 2021, indicating a drop of 7.7 percent.

The decline would not likely impact on the nation’s 2021 budget, which was benchmarked on $57 per barrel and 1.8 mb/d output as the nation still produces between 300,000 – 400,000 barrels of Condensate daily, bringing total output to about 1.8mb/d.

Moreover, prices have been consistently above $65 per barrel over the last two months while the prices of Bonny Light, Brent and OPEC Basket remained at $66.71, $67.76 and $66.57 per barrel respectively as at yesterday.

OPEC which painted a fairly good picture of the market, stated: “Stimulus measures in the US and accelerating recovery in Asian economies are expected to continue supporting the global economic growth forecast for 2021, now revised up by 0.1 pp to reach 5.5% y-o-y. This comes after a 3.5% y-o-y contraction estimated for the global economy in 2020.

“However, global economic growth for 2021 remains clouded by uncertainties including, but not limited to, the spread of COVID-19 variants and the speed of the global vaccine rollout.

“In addition, sovereign debt levels in many regions, inflationary pressures and central bank responses are key factors to monitor. After a contraction of 3.5% in 2020, US economic growth in 2021 is now expected to reach 6.2%. “The economic growth forecast for the Euro-zone in 2021 is lowered to stand at 4.2%, following a contraction of 6.8% last year. Similarly, Japan’s economic growth forecast is lowered to 3.0% for 2021, following a contraction of 4.9% in 2020.”

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