As the reality of the mandatory cut of 939,000 barrel from Nigeria’s oil production by the Organization of the Petroleum Exporting Countries (OPEC) dawned on the Nigerian National Petroleum Corporation (NNPC), the national oil company is shifting focus to gas, condensate and other revenue streams to tackle the earnings challenge arising from the Oil cartel cut arrangement.
The cut agreement is the outcome of the 13th OPEC and non-OPEC Ministerial Meeting (ONOMM) concluded Tuesday, 5 January 2021 to help prop up prices which have been battered by a price war between Saudi Arabia and Russia, and the coronavirus crisis.
Nigeria and her partners are expected to cut oil production by 83,571,000 in a total of 89 days from 1 February to March 31. The cut will slice off $3.342 billion revenue or N1.321 trillion. Nigeria will bear 60 per cent of this amount $2,005,704,000 or N792.9 billion while the partners, also will see their accruals drop by $1,337,136,000 or N528.6 billion.
The Group Managing Director of NNPC, Mele Kyari speaking on “Outlook for Africa/Nigeria’s Oil & Gas Sector in Post-Covid Era” at an ongoing virtual Gulf Intelligence “Global” UAE Energy Forum 2021 says the shift in focus to gas owing to the steady and reliable revenue stream from gas during the height of the Covid-19 pandemic that battered oil prices in 2020.
“We are focusing more on gas, condensate and other revenue streams to tackle the revenue challenge arising from the OPEC+ production cut arrangement,” says Kyari who was hopeful of an increase in demand for crude oil and a marginal increase in output,
The NNPC boss admitted the negative effects of the cut on government revenue but says it is the best step towards redeeming the value of hydrocarbon resources at the global market in the interest of all.
He explained that gas production and utilization would remain a key priority for the Corporation in 2021.
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