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Business News of Thursday, 12 January 2023


NNPC targets 2.2m bpd oil output in 2023

Mele Kyari, NNPC CEO Mele Kyari, NNPC CEO

Nigeria’s oil production could hit 2.2 million barrels per day in 2023, the Nigerian National Petroleum Company (NNPC) Limited has said.

The company’s chief executive officer, Mele Kyari, disclosed this while speaking at the 13th global UAE virtual energy forum on Wednesday.

In recent months, Nigeria has failed to meet the OPEC production quota as it struggles to combat oil theft which has affected production output.

According to data from the Organisation of Petroleum Exporting Country, Nigerian production fell in the first seven months of the year to about 1.1 million barrels a day of crude equivalent in July from over 1.4 million barrels in January.

With an average of 1,083,899 barrels per day in July, Nigeria’s crude oil production plunged below one million barrels per day (972, 394 bpd) in August, the lowest ever in several years.

In August last year, OPEC raised Nigeria’s oil production quota to 1.830 million barrels per day.

Speaking on Wednesday, Mr Kyari said the country is making efforts to restore optimal oil production and meet the OPEC quota.

He said: “In our case, we have a different challenge other than just a lack of investment in the last four to five years. There has been no investment in the last four to five years. That is correct. That is true in many other jurisdictions where cash flows do not support the investment.

“We had a different challenge; the security challenge that became very manifest in early 2022. And of course, we took definite steps to bring back production and this is paying up.

“For instance, in around July, our net crude oil, excluding condensate, came down to around 1 million bpd. That is the lowest ever in the history of our country and our industry.”

Other concernsThe NNPC boss added that practical steps taken by the federal government to address issues related to pipeline security have led to a significant recovery in the country’s oil production.

“So for us, we see a trajectory of restoring production, including condensate, within the year.

“Definitely, we believe that we can hit our target of 2.2 million bpd but our OPEC target is 1.8 million bpd, but we know that it is practical to do 2.2 million within 2023,” he said.

He noted that there are ongoing construction works on some of NNPC’s pipelines “which will clearly make 1.8 million bpd very easy” to attain.

He explained further that the rehabilitation exercise remains a commercial decision.

“We don’t see any challenge delivering products into our country minding the fact that almost 100 per cent importation of our petroleum are required because of the very fact that we have decided to rehabilitate all our four refineries in one sweep and that is the right thing to do.

“And as soon as we’re doing this (as we all know on this platform) producing locally brings you close to supply and that removes energy security issues,” he said.

According to him, NNPC is very comfortable with what is being done now and sees no danger in the supply of oil into the country.

“We are meeting all our applications. We don’t have any payment issues with our suppliers,” he said.

“And of course, as we are seeing the growing production from the crude oil and condensate production, we know that ability to pay will not be an issue for us also,” he added.

Speaking on petrol subsidy, Mr Kyari said the management of arbitrage across borders from supply chain partners remains a key issue.

He added that NNPC is becoming a completely private company today owned by the government but operating just like any other company in the country.

READ ALSO: OPEC+ agrees small oil production cut“Therefore, our relationship with the government today, in terms of supply of fuel, is on a commercial basis,” he said.

“There is a service level agreement between us and the government to supply fuel and then sell it at the price that the policy decision of the government has asked us to do. So, it’s not a problem at all for us as a corporate company.

“It is of value to us. We’re delivering products to the country. We have sufficient cash flow to support this and there is a relationship between us and the government.”

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