By Adedapo Adesanya
The Nigeria National Petroleum Corporation (NNPC) has delayed publishing its future oil export plans as it negotiates with local companies and international stakeholders about how to cut output in line with a global deal that will see 10 percent cut in daily production globally.
This was disclosed by Reuters which cited trading sources on Monday, April 27.
Official selling prices (OSPs) for Nigerian oil grades for the month of June, which are usually issued in the second or third week of each month, had still not been issued as at press time on Monday.
And as cut agreed by the oil producers, the Organisation of the Petroleum Exporting Countries (OPEC), Russia, and others are expected to commence from Friday, May 1.
The OPEC+ alliance made up of Nigeria, Saudi Arabia, Russia and other allied producers agreed to cut their combined output by 9.7 million barrels per day, or each reducing their production by more than 20 percent.
The first round of output reduction will run in May and June. Further cut will then be less severe after that till around 2022.
It was, however, disclosed that traders expect the May OSPs to fall below April’s record lows published by NNPC.
According to one trader cited by the news agency, “The NNPC is working out the cuts for the international oil companies, that’s why the programme for June and OSP for May is yet to come out.”
Another source revealed that Nigeria, which agreed to the production ceiling signed by OPEC and its allies, had revised its May programmes for oil cargoes and would also have to lower its output in June, based on the OPEC+ deal.
“May cargoes will get delayed and new June cargoes may be relatively few.”
The National oil company, which has not issued any public notice of delays or output cut, needs to discuss reduction with companies and stakeholders working in the country, including Royal Dutch Shell, Exxon Mobil, Eni, and Chevron before reaching any decision.
And with storage problem facing the country, more than 60 percent of Nigerian crude cargoes are still available for export in April and May because due to the coronavirus problem, key importers are shunning the commodity.
According to the sources, Nigeria’s key crude grade, Bonny Light, was heard to be offered at as low as dated Brent minus $5 per barrel, compared to a premium of $3 per barrel in more normal market conditions.
Last week, Brent Crude fell to its lowest level in twenty years and this further compounds problem on Nigeria’s oil dependent economy.
