After meeting with oil firms last week, Nigeria’s oil minister said on Friday 24th June 2022 that he anticipates some security improvements in the industry, allowing the continent’s largest oil producer to reach its OPEC production quota by the end of August. Millions of barrels of crude oil are lost to theft and vandalism in Nigeria every year, illustrating the enormous financial losses that the West African nation suffers as a result of insecurity. The President has vowed to end oil theft and has established dedicated courts to address the issue.
The government allocated 1.8 million barrels per day for output this year but due to oil theft and vandalism, Production fell to 1.5 million BPD in the first quarter.
“For us in Nigeria, we are at a low point. We are not able to meet our OPEC quota,” Oil Minister Timipre Sylva told a media conference but added that he expects to implement the security measures soon.
“We have given ourselves just about a month to ensure that we can … we believe that by August we would see some improvement in security,” he said.
“At this moment, I think prices are firm enough and I don’t think there will be any surprise in August. We believe that the market is well supplied,” he said.
“Of course, some people consider price to be on the high side and expect us to pump more. At this moment there is a little capacity that can be brought to the market.”
Sylva added that Nigeria had started construction on a 614 km (382 mile) gas pipeline that will travel through Algeria to reach Europe. Algeria, Niger, and Nigeria held talks earlier last week about reviving a decade-old project to transport gas through the Sahara, which might provide Europe with a chance to diversify its gas supply. Sylva said Nigeria was now embarking on the construction of its portion of the gas pipeline. The revival comes at a crucial moment as the European Union looks for other sources of energy and attempts to wean itself off Russian gas following Russia’s invasion of Ukraine.
In conclusion, insecurity has been a major challenge in the Nigerian oil and gas sector and beefing up the security architecture would ideally have a positive impact on oil output which is necessary to achieve the OPEC production quota. The statement issued by the Minister of state for petroleum resources does not signify an interference in the prices of AGO/MGO which makes it unclear if the current surge in price will reduce in the near future.
Source: Reuters, Oriental news
