Nigeria to renegotiate crude oil quota, after OPEC cuts country’s output by 440,000

Nigeria’s crude oil production quota will be renegotiated in November, the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, has revealed.

The country doesn’t intend to cut its crude production output, instead, Kyari said Nigeria is looking to increase its crude levels by 200,000 to 300,000 barrels per day.

Kyari said the ramp-up of production output is expected by October, before another increase will be requested by the Nigerian government in November at the meeting of OPEC+, which makes up members of the Organisation of the Petroleum Exporting Countries and its non-OPEC partner, Russia.

“OPEC understands that it is not that Nigeria does not have what it takes to produce more crude, but the challenge has been in terms of security, and everything we are doing to combat insecurity in the Niger Delta is working.

“OPEC has now given us (Nigeria) a target to increase production between now and October, and that figure is going to be worked with. I think it is very practical to get to between 1.5/1.6 by October,” he told Bloomberg on Tuesday.

Recall that Ripples Nigeria reported in June that Nigeria closed May as the largest crude oil producer, recording 1.18 million barrels per day, according to Direct Communication, while secondary sources reported Nigeria’s output for the same month is 1.26 million barrels.

READ ALSO:Oil price rises above $85 after OPEC+ members announce surprise production cut

Regardless, both reported outputs are below the OPEC quota handed to Nigeria. The country was expected to produce 1.8 million barrels per day.

In the next four months, Nigeria’s quota is 1.826 million bpd in August, 1.830 million bpd in September, 1.826 million bpd in October and 1.747 million bpd in November.

However, from next year, the country’s quota will drop to 1.380 million barrels per day from January to December 2024, after OPEC cuts Nigeria’s output, after consecutively failing to meet its quota.

The Nigerian government is now working towards raising the quota in October, as the country has the capacity to produce 2.1 million bpd, but will seek approval from OPEC+.

“Nowhere near Nigeria’s capacity,” Kyari said, adding, “We have a clear case when during the COVID, we had capacity to do close to 2.1mb/d. So we know we have the capacity.”

Explaining why Nigeria has been struggling to meet its quota, Kyari said: “The issues are around the pipeline, and once we are able to resolve the challenges, then, we can produce higher.”

“We are more confident to get a new quota than we have at the moment. The country’s target is at the very least, 2mb/d, and when you add that to the condensate production, you would get a higher number, and of course that would also meet the expectation of the country,” the NNPC GCEO said.

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