Nigeria’s crude oil production fell to a record low of 1.57 million barrels per day last month, the Organisation of Petroleum Exporting Countries has said.
The producer group said in its monthly oil market report published on Wednesday that the country’s oil output stood at 1.66 million bpd in November, based on direct communication.
The group uses secondary sources to monitor its oil output, but also publishes a table of figures submitted by its member countries.
Nigerian crude production in December was in line with its quota of 1.77 million bpd, according to secondary sources.
“Nigeria is more sensitive about production than price. A lower oil output would affect the actualisation of budgeted revenue projections as oil revenue accounts for 31.35 per cent of the total revenue projected,” analysts at the Financial Derivatives Company Limited said in a recent note.
OPEC and its partners, including Russia, agreed to cut output by a further 500,000 bpd from January through March 2020, on top of their previous cut of 1.2 million bpd.
According to S&P Global Platts, starting this month, Nigeria’s quota drops to 1.75 million bpd under the OPEC+ coalition’s agreement to deepen its production cuts through March.
Last week, the Group Managing Director, Nigerian National Petroleum Corporation, said the country was shifting its upstream work towards natural gas liquids and natural gas, to better comply with its crude production quota under the OPEC+ agreement.
“You can produce condensate which is not part of the OPEC commitments. We are focusing our production to more gas-based reservoirs so that we can continue to grow our production while maintaining balance in the market,” he was quoted as saying on the sidelines of the Atlantic Council Global Energy Forum in Abu Dhabi.
OPEC said in the report that a rise in oil demand growth this year would be offset by a sharper increase in non-OPEC supply.
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“Continued accommodative monetary policies, coupled with an improvement in financial markets, could provide further support to ongoing increases in non-OPEC supply,” the report said, adding that OPEC+ cuts remained essential in maintaining stability in the oil market.
The pace of supply growth is expected to continue to outpace oil demand, further putting pressure on interest for OPEC crude, which means it may need to keep its cuts going to balance the oil market.
The group said demand for its crude would average 29.50 million bpd in 2020, which is 60,000 bpd above what it produced in December.
However, demand for its crude from January to March this year, which is the duration of its current cuts, is predicted to average 29.19 million bpd.
Demand for OPEC crude averaged 30.60 million bpd in 2019.
The group’s 14 members pumped 29.44 million bpd in December, compared with 29.61 million bpd in November, according to secondary sources.
The fall was due to declines in nine of its members, led by Saudi Arabia.
Oil demand growth for 2020 was revised up by 140,000 bpd to 1.22 million bpd.
This upward revision was said to be due to a better economic outlook for 2020 in various economies, buoyed by improved trade sentiment between the US and China.
For 2019, the report showed that oil demand growth only grew by 930,000 bpd.
Non-OPEC supply is projected to grow by 2.35 million bpd to 66.68 million bpd in 2020.
According to the report, the key drivers of growth include the United States, Brazil, Norway, Russia, Canada, Kazakhstan and Australia, while there are expected to be declines in Indonesia, Thailand, Egypt and Colombia.
Non-OPEC supply averaged 64.34 million bpd in 2019, a year-on-year growth of 1.86 million bpd.
OPEC noted that the US crude output is “continuing to increase, despite the pullback in drilling, as companies are running through their inventories of drilled but uncompleted wells.”
The US crude oil production in 2020 is forecast to grow by 980,000 bpd to 13.18 million bpd.
OPEC and its allies plan to meet March 5-6 in Vienna to review their production cut agreement and decide whether to extend them.