Thursday, January 16,
2020 /11:46 AM / By CSL Research / Header Image Credit: Independent Newspaper
Yesterday, Organisation of Petroleum Exporting Countries
(OPEC) released its monthly oil market report for December which showed that
Nigeria's oil production dipped to a new low extending 3 months of consecutive
decline. Specifically, Nigeria's daily crude production (excluding condensates)
for December 2019 fell to 1.57mb/d from 1.66mb/d in November 2019.
Furthermore, Nigeria's average daily production
(excluding condensates) in 2019 came to 1.73mb/d. Adding condensates production
which the Department of Petroleum Resources (DPR) pegged at between 414,000 - 497,000 b/d (IEA estimates 220,000 - 250,000 b/d) brings total average
production in 2019 to roughly 2.2mb/d in line with Mele Kyari's declaration at
the Atlantic Council Global Energy Forum.
Nigeria's oil production quota was previously placed
at 1.69mb/d which was not complied with. However, following consultations with
the cartel in October 2019, the production quota was lifted to 1.77mb/d.
In recent times however, the country's production has
been below quota. NNPC boss, Mele Kyari has since declared the country is
directing its upstream efforts at improving natural gas liquids and natural gas
to better comply with OPEC's quota since OPEC's quota excludes production of
NGLs.
We think Nigeria's decision to comply with its OPEC+
quota bodes positively for the global oil market without necessarily hurting
local targets.
The 2020 budget assumption of 2.18mbd oil production
now looks achievable provided condensates production in line with DPR estimates
can be maintained.
However, concern remains how Nigeria can exploit its
rich deposits of NGLs given dearth of adequate technological infrastructure.
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