Nigeria is targeting additional revenue of up to $2.8 billion from oil price rebound as OPEC+ agree on a historic curtailment of crude oil supply to rebalance and stabilize the global oil markets.
OPEC+ have agreed to a historical output cut of up to 10million barrels per day (bpd) between May and June 2020, 8million bpd between July and December 2020 and 6million bpd from January 2021 to April 2022, respectively.
Based on reference production of Nigeria’s October 2018 production of 1.829m bpd of dry crude oil, Nigeria will now be producing 1.412mpbd, 1.495mbpd and 1.579mbpd 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.
It is expected that this historic intervention when concluded will see crude oil prices rebound by at least $15 per barrel in the short term, thereby enhancing the prospect of exceeding Nigeria’s adjusted budget estimate that is currently rebased at $30 per barrel and crude oil production of 1.7mbpd.
Consequently, “the price rebound may translate to additional revenues of not less than $2.8 billion for the Federation, a statement by the Minister of State for Petroleum, Mr Timipre Sylva, said.
The OPEC+ agreement however, awaits close out of ongoing engagement with Mexico to agree on its full participation.
Nigeria is participating in the pursuit of her commitment to the framework of the Declaration of Cooperation entered on 10th December 2016 and further endorsed in subsequent meetings as well as the Charter of Cooperation signed in July 2019.
“It is therefore pleasing to note that despite the production curtailments that this historic agreement will entail, all planned industry development projects will progress as they will be delivered after the termination of the 9th OPEC/Non-OPEC Ministerial Meeting Agreement on adjus|tments in April 2022,” the Minister added.
The price war between OPEC top producer, Saudi Arabia and biggest non OPEC member Russia, saw oil prices crash to an 18year low following the Covid-19 pandemic.