Adedapo Adesanya
By Adedapo Adesanya
The Nigerian National Petroleum Corporation (NNPC) has revealed that Nigeria has complied with the oil production quota allotted to the country by the Organisation of the Petroleum Exporting Countries (OPEC).
The Group Managing Director (GMD) of the state oil company, Mr Mele Kyari, in an interview with Channels TV on Monday evening, disclosed that Nigeria’s oil production is between 1.6 million barrels per day and 1.7 million barrels per day.
Mr Kyari said that prior to the COVID-19 pandemic, Nigeria had reached its highest output in 10 years, which was cut short by the effect of the pandemic on the market.
In his words, “Our production reached 2.4 million barrels per day, that did not happen in 10 years, that means you also have to face what COVID has put on the table, so you have to cut down production.
“Today, we are producing anywhere between 1.6 -1.7 million barrels per day,” he added.
According to Mr Kyari, Nigeria needed time to meet its obligations and faced some challenges at the onset of the pandemic but explained that the obligations have been fully met.
“There is a distinction between what you can do immediately and what you can do over a period of time. Sometimes we do have technical constraints that make it impossible to meet that quota.
“You may have seen through OPEC conversations that in some months we actually under-produced. Put in on balance, Nigeria has completely complied with our obligations to OPEC.”
According to two OPEC+ sources, compliance with oil production cuts in February rose to 113 per cent compared with a January compliance figure of 103 per cent.
Compliance from OPEC+ members reached 124 per cent, a figure which includes the additional voluntary cut from Saudi Arabia, which had taken an extra one million barrels per day cut.
The sources also noted that compliance from non-OPEC members in the alliance reached 94 per cent.
Reason for OPEC+ output limits
In 2019, the price of crude oil began to slide and at the beginning of 2020, it significantly waned as a result of a price war between two heavyweights in the market, Saudi Arabia and Russia.
Also, the COVID-19 pandemic caused an oil glut and because many nations restricted movements and travels in order to control the spread of the virus, the demand for the commodity reduced.
As a result of supply outweighing demand, prices crashed to $0 and to salvage the situation, oil producers came together to agree to reduce supply to support the value.
About 10 per cent of the daily global supply was cut off from the market and prices began to rise. Due to the success, members of the oil cartel agreed to continue to limit the supply of the product to the market.
