Nigeria may earn about $10.61bn from crude oil sales between May and December this year following latest decision by members and non-members of the Organisation of Petroleum Exporting Countries to cut production.
Also, the country will earn about $22.74bn from crude oil between January 2021 and April 2022 going by the volume of crude oil curtailment to be implemented by Nigeria during the 16-month period, as agreed by OPEC+.
These earnings are based on the $30/barrel average price of Brent, the crude against which Nigeria’s oil is priced.
Crude oil price in Nigeria’s 2020 budget was recently rebased from $57 to $30 following the crash in global oil prices occasioned by the impact of COVID-19.
In the OPEC+ agreement, Nigeria will join the group to cut supply by 9.7 million barrels per day between May and June 2020, eight million barrels per day between July and December 2020 and six million barrels per day from January 2021 to April 2022.
Minister of State for Petroleum Resources, Timipre Sylva, explained that based on reference production of Nigeria for October 2018 of 1.829 million barrels per day of dry crude oil, Nigeria would now be producing 1.412 million barrels per day, 1.495 million barrels per day and 1.579 million barrels per day respectively for the corresponding periods in the agreement.
At a production of 1.412 million barrels per day for 30 days in May 2020, going by Sylva’s explanation, Nigeria will be producing about 42.36 million barrels for the month.
It will also produce the same volume in June, bringing the total volume for both months to 84.72 million barrels.
With an average cost of $30 per barrel, Nigeria will therefore earn $2.54bn from crude in May and June 2020.
The country is to produce 1.495 million barrel per day from July to December 2020, which is a little above 180 days for the six-month period, hence total crude production during the period will be 269.1 million barrels, valued at $8.1bn.
It therefore implies that from May to December 2020, the country will earn $10.61bn.
Sylva, in his breakdown on Nigeria’s production cut in relation to the agreement by OPEC+, stated that from January 2021 to April 2022, Nigeria would be producing 1.579 million barrels daily.
This means that the country will produce 757.92 million barrels during the 16-month period and if the $30 average benchmark price for Brent persists, the country will earn $22.74bn.
Oil prices, however, had been fluctuating and operators believe that the commodity will increase beyond the $30 per barrel price once OPEC+ and other G20 countries start implementing the agreed cuts in crude oil production.