The possibility of Nigeria and other countries to actualise their production output quota, which was increased for September 2022 by the Organisation of Petroleum Exporting Countries (OPEC) is currently under threat as the International Energy Agency (IEA) on Thursday said the crude oil output of the organisation and its allies would likely reduce.
OPEC, during the 31st OPEC and non-OPEC ministerial meeting held via videoconference on August 3, 2022, had agreed to increase the crude oil supply quota of Nigeria to 1.830 million bpd. Nigeria’s production quota was also increased in August by 1.5 per cent amounting to 1.826million bpd from 1.799mbpd in July 2022.
The oil cartel and its allies during the meeting also agreed to increase overall supply slightly by just 100,000 bpd, which is a small fraction of the group’s overall output and a far smaller increase than it reviewed up in recent months.
According to a production table posted on OPEC’s website, the required production for September 2022 for Algeria is 1.057mbpd; Angola 1.529mbpd; Congo, 325mbpd; Equatorial Guinea, 127mbpd; Gabon, 187mbpd; Iraq, 4.663mbpd; Kuwait, 2.818mbpd; Saudi Arabia, 11.030mbpd; United Arab Emirate, 3.186mbpd; and Azerbaijan, 718mbpd.
Others are Bahrain, 205mbpd; Brunei, 102mbpd; Kazakhstan 1.710mbpd; Malaysia, 595mbpd; Mexico, 1.753mbpd; Oman, 883mbpd; Russia, 11.030mbpd; Sudan, 75mbpd; and South Sudan, 130mbpd.
However, IEA explained in its monthly report for August that was released on Thursday that the 100,000 barrels per day (bpd) production target increase that OPEC and its allies set for September may end up effectively being a production cut as Russian production declines. It stated that the oil cartel would most likely not carry out the expected oil output increase in the coming months due to limited spare capacity.
The Paris-based organisation provides data, analysis and recommendations on the global energy sector. It said while a decline in Russian crude oil production was being expected, it had revised its outlook for world oil supply upwards, with Russia’s supply declines now seen as more limited than it previously forecast.
OPEC had, during its last meeting on August 3, 2022, acknowledged its ‘severely limited’ spare capacity, which necessitates using it with great caution in response to severe supply disruptions. It also noted that chronic underinvestment in the oil sector had reduced excess capacities along the value chain (upstream/midstream/downstream).
The oil cartel also highlighted with particular concern that insufficient investment into the upstream sector would impact the availability of adequate supply in a timely manner to meet growing demand beyond 2023 from non-participating non-OPEC oil-producing countries, some OPEC member countries and participating non-OPEC oilproducing countries.
The IEA monthly report said: “Comparatively low levels of operational spare pro- duction capacity, held mainly by Saudi Arabia and the United Arab Emirates, may thus all but rule out substantial further OPEC+ output increases in the coming months.
“The production cut forecast will place the burden of meeting the anticipated 2.1 million bpd 2023 global oil demand growth in the second half of the year rests squarely on the shoulders of other oil producers outside the OPEC+ group. “Non-OPEC+ supply is projected to rise by 1.7 million barrels a day in 2022 and 1.9 million in 2022.
That’s a significant improvement compared with last year, but still falls short of 2.1 million barrels a day of demand growth expected in 2022 and 2023.”