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Nigeria’s Oil Production to Hit 1.6mbpd in Q1 2023

Importation of petroleum products into Nigeria will reduce significantly by 2023 with the commencement of operations of the Dangote Refinery

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The Federal Government has projected oil production to hit 1.6 million barrels of oil per day in the first quarter of 2023.

The Finance minister, Zainab Ahmed disclosed this at the World bank’s Nigeria Development Update and Country Economic Memorandum in Abuja.

The finance minister who was represented by the Director-General of the Budget Office of the Federation, Ben Akabueze also stated that the importation of petroleum products into Nigeria will reduce significantly by 2023 with the commencement of operations of the Dangote Refinery and the completion of rehabilitation work on the Port Harcourt Refinery before the end of next year.

Investors King understands that Dangote Refinery which is being built in the Lekki part of Lagos State is the largest oil refinery in the world in single production. It has a capacity of 600,000 barrels per day. 

Similarly, apart from Dangote Refinery and Port Harcourt refinery which is owned by the government, other oil refineries under construction include BUA refinery in Akwa Ibom State with a capacity of 200,000 barrels per day. 

The finance minister through her representative also asserted that Nigeria needs to depart from” business as usual “ policies, which cause fiscal pressures such as lower-than-expected revenue and the rising cost of petrol subsidy.

In the same development, the Nigeria National Petroleum Company (NNPC) Limited yesterday reaffirmed that with the return of Forcados and partial restoration of the Trans Niger Pipeline (TNP), Nigeria’s oil production has increased significantly from about 800,000 barrels per day recorded in September.

Speaking on Arise News Channel, Chief Upstream Investment Officer of the NNPC, Bala Wunti noted that the increase in oil production was the result of the collaboration of the security agencies, regulators, oil-producing communities, and other stakeholders.

He stated that about 70 percent of the illegal oil refineries have been deactivated. He revealed that before now, Nigeria was losing about 21 million barrels per month and up to $1.9 billion every 30 days.

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Nigeria Will Become Africa’s Biggest Oil Refining Hub by 2025– Report

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A leading research firm, Hawilti Limited has projected that Nigeria will emerge as Africa’s biggest crude oil refining hub by 2025.

This was contained in its report released on Monday based on its most recent research on African refineries with the continent’s outlook for 2023.

Investors King understands that Hawilti Ltd is a pan-African investment research agency and advisor to businesses, investors, public and private institutions, as well as governments across Africa with the goal of building a transparent and vibrant continent through its unique research and contents.

According to its report, the Dangote Refinery of 650,000 barrels per day capacity and the rehabilitation of Warri, Port Harcourt and Kaduna refineries with a total refining capacity of 445,000 barrels per day will make Nigeria top the list by 2025.

On the West Africa region’s progress in crude oil refining, the report pointed out its positive outlook and growth as its capacity increased in 2023.

It added that the West Africa region now has the largest refining capacity in sub-Saharan Africa of which its operation is presently at 23 percent.

“Both the opening of the Dangote Refinery and the rehabilitation of state-owned refineries have the potential to make Nigeria Africa’s biggest refining hub by 2025.

“The long-awaited Dangote Refinery, a 650,000 barrels per day single-train crude refining facility that has been a decade in the making, is finally expected to start production this year. Its commissioning is already sending hopes that it could finally start rebalancing Nigeria’s trade deficit.

“Tecnimont continues to make progress on bringing Port Harcourt’s complex back to 90 per cent of its capacity while Daewoo E&C was selected in 2022 to execute two ‘quick fix’ projects at both Warri and Kaduna,” says the report.

Hawilti, however, kicked against Nigeria’s importation of petroleum products and petrol subsidy as its refineries are under construction.

It urged Dangote Refinery to reduce imports, increase its currency savings, fight inflation, and enhance its macroeconomic outlook.

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Nigeria’s Oil Revenue Dropped by N500bn Last Month– Report

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Nigeria has recorded a sum of N500 billion loss in its oil revenue last month due to low crude oil production.

Investors King reports that Nigeria’s total oil export in January was 37.2 million barrels instead of the projected 49.6 million barrels of oil if it had exported 1.6mb/d.

The report as contained in the shipping data of Refinitiv Eikon, an export tracking firm indicated that Nigeria exported 1.2mb/d instead of the 1.6mb/d quota given to it by the Organisation for the Petroleum Exporting Countries (OPEC).

It noted that with the current data, Nigeria’s oil production is yet to totally recover and attain its expectation.

Selling at $89 per barrel in January, Nigeria made N1.5 trillion from its oil exportation which is less than OPEC’s target of 2 trillion. This makes the country at a loss of N500 billion as it didn’t meet up OPEC’s 1.6mb/d target.

However, the Refinitiv Eikon revealed that several other countries aside Nigeria failed to meet up OPEC’s production quota. Countries like Iraqi, Saudi Arabia and Iran had declined.

Investors King recalls that in November, OPEC had pegged a 2 million barrel per day cut to the OPEC+ output target. In its expectation, 1.27 million barrels per day ought to be disbursed by 10 participating OPEC members.

The statistics showed that the 10 OPEC countries produced 920,000 barrels of oil per day below the stipulated target for the month of January. Meanwhile, the decrease in December was marked as 780,000 bpd.

The Group Chief Executive Officer of the Nigeria National Petroleum Company Limited (NNPCL), Mele Kyari, had said the issue of oil theft and vandalism which has eaten deep into the sector is a major cause of Nigeria’s low production. 

He noted that the country loses 900,000 barrels per day to theft which must be urgently looked into for increased output in the oil sector.

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Oil Gains on International Energy Agency Comment

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Crude oil prices inched higher on Monday after shedding 8% last week amid rising recession concerns. On Monday, oil appreciated slightly on Fatih Biro, the International Energy Agency (IEA) Executive Director comments that China’s recovery remains a key driver for oil prices.

Brent crude rose 32 cents, or 0.4%, to $80.26 a barrel at 8:00 am, while U.S. West Texas Intermediate (WTI) crude futures climbed 22 cents, or 0.3% higher, to $73.61.

Last Friday, WTI and Brent slid 3% after strong U.S. jobs data raised concerns that the Federal Reserve would keep raising interest rates, which in turn boosted the dollar. The stronger greenback typically reduces demand for dollar-denominated oil from buyers paying with other currencies.

While recession fears dominated the market last week, on Sunday International Energy Agency (IEA) Executive Director Fatih Birol highlighted that China’s recovery remains a key driver for oil prices.

The IEA expects half of global oil demand growth this year will come from China, where Birol said jet fuel demand was surging.

He said depending on how strong that recovery is, the Organization of Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, may have to reassess their decision to cut output by 2 million barrels per day through 2023.

“If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their (output) policies,” Birol told Reuters on the sidelines of a conference in India.

Higher interest rates, however, are keeping a lid on further price gains, as they are likely to curtail economic growth and increases in fuel demand, say analysts.

“We are not seeing any big evidence of a China domestic demand rebound yet, though mobility numbers are encouraging. Hence, concerns about central banks’ rate hike cycles and higher for longer interest rates remains the key drag on oil prices after falling more than 7% last week,” said Suvro Sakar, lead energy analyst at DBS Bank.

“It’s not immediately intuitive that good jobs data would cause a crash in oil prices, but such are the vagaries of the market currently.”

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