The Federal Government has agreed to implement the resolution of members of the Organisation of Petroleum Exporting Countries (OPEC) which last Thursday undertook to slash crude oil production quota of participating countries to reverse the free fall in the international prices of oil.
Minister of State, Petroleum, Mr Timipre Sylva, in a statement Sunday on the sidelines of a virtual meeting of OPEC+, he attended with the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, noted that the move came after Mexico agreed to sign the resolution.
Sylva reiterated that the development was expected to earn Nigeria an additional $2.8 billion and a $15 hike in the international price of crude oil which currently hovers around $30 after implementation begins in May.
He said: “On Easter Sunday, April 12th, 2020, Nigeria joined its other OPEC+ counterparts to bring into effect the agreement to cut 9.7 million barrels of supply following the alignment of Mexico.
” The intervention of the United States of America resulted in Mexico agreeing to a cut of 100 KBOPD and to be complemented by an additional 300 KBOPD by US producers.
“This will enable the rebalancing of the oil markets and the expected rebound of prices by $15 per barrel in the short term.
“This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel”.
The minister stressed that the entire OPEC production cut currently put at 9.7 million barrels per day will gradually reduce between now and 2022 to about 6 million bpd, whereas Nigeria’s quota will range between from 1.412 million to 1.579 million bpd.
“As agreed, Nigeria will join OPEC+ to cut supply by 9.7 million barrels per day between May and June 2020, eight million barrels per day between July and December 2020 and six million barrels per day from January 2021 to April 2022, respectively.
” Based on reference production of Nigeria of October 2018 of 1.829 million barrels per day of dry crude oil, Nigeria will now be producing 1.412 million barrels per day, 1.495 million barrels per day and 1.579 million barrels per day respectively for the corresponding periods in the agreement.
“This is in addition to condensate production of between 360-460 KBOPD of which are exempt from OPEC curtailment” he said.
A combination of factors , including the impact of the covid-19 pandemic and the price war between Russia and Saudi Arabia had led to a major crash in the international prices of crude oil.
The development led to the country reviewing its 2020 budgetary benchmark of oil from $57 to $30.