Oil earnings may hit N6.9tn monthly as production rises

The Federal Government is set to earn about N6.99tn monthly from the oil sector as the Nigerian National Petroleum Company Limited in collaboration with stakeholders, has raised crude oil production to 1.8 million barrels per day.

The average price of Brent, the global benchmark for crude in 2024 is around $81 per barrel. This is slightly lower than the 2022 price of $101 per barrel, but relatively stable compared to the 2023 price of $82 per barrel.

By producing 1.8mbpd at an average price of $81 per barrel, the country will rake in $145.8m. In 30 days this translates to $4.37bn.

At a moderate official exchange rate of N1,600/$, this gives N6.99tn, which is the estimated amount that the Federal Government may earn monthly due to the latest rise in oil output.

The achievement in oil output hike was announced by NNPC’s Group Chief Executive Officer, Mele Kyari, during a meeting at the Oil Production War Room at NNPC headquarters on Thursday in Abuja.

The meeting presided over by the Minister of State for Petroleum Resources (Oil) Heineken Lokpobiri, was attended by the Chairman of NNPC Ltd Board, Chief Pius Akinyelure; the company’s GCEO, Kyari; Chief Financial Officer, Mr Adedapo Segun; Executive Vice President, Downstream, Mr Isiyaku Abdullahi; Executive Vice President Upstream, Udobong Ntia; and Chief Upstream Investment Officer of NNPC Upstream Investment Management Services, Mr Bala Wunti, among others.

During an interactive session with the Senate Committee on Finance at the National Assembly in December last year, the GCEO assured that the projections on crude oil production and price benchmark for the 2024 Budget were realistic and realisable.

The company also said it now produces 7.4 billion standard cubic feet of gas to power the gas infrastructure, especially the AKK. This is an improvement from 6.1 billion standard cubic feet of gas earlier in the year.

The NNPCL noted that the accomplishment, which aligns with the government’s budget, reflects the dedication of all of its teams over the past weeks.

Speaking at the meeting, the Chief Production War Room Officer, Lawal Musa, said with the leadership of NNPC, collaborating with stakeholders, particularly its partners and government and private security agencies, and the communities were able to move the production to active collaboration within the system and external engagement and alignment with the regulators.

“Today, the entire industry is very proud, we are grateful that we have crossed a line of 1.8 million barrels per day. This is a significant milestone. For a very long time, we have not been able to achieve this. Concurrently, we have also crossed 7.4BCF of gas. This is monumental,” he said.

He added that the NNPC is fully aligned and committed to delivering greater value, and committed to delivering 2 million barrels by the end of the year. This, he said, is possible and achievable.

He said as far back as 25th of June, when the war room started, crude oil production actually was at 1.430 bpd and by 11th of August, we crossed the 1.7 mark. This was the Presidential mandate that the industry must get to 1.7 million bpd.

“We are proud that even before the end of the year, as early as August, we have crossed that mark so confidently the industry has delivered on the mandate of Mr President. But that is not just enough.

“We are confident that with this same momentum, with active collaboration, especially on the security front, we are actually seeing clear interventions, speed of recovery, and also clear delivery to market, and we can see the possibility of getting to the 2 million barrels before the end of the year,” he said.

The Minister of Petroleum, in his speech, described the feat as remarkable as NNPC Ltd has demonstrated that it has the potential to achieve and even surpass the two million barrels per day crude oil production target for December this year.

He said, “Today we are grateful that we have crossed a line of 1.8 million barrels per day, and also crossed 7.4 BCF of gas, this is our agenda. Today, the entire team is fully aligned and committed to delivering greater value, and we’re committed to delivering two million barrels by the end of the year.

“This is possible. This is achievable. I’m a very proud minister. We can do it again. On behalf of the Ministry of Petroleum Resources, on behalf of the federal government of Nigeria, let me formally congratulate the Chairman, board members, and the management of NNPC for navigating this process.”

In his remarks, the NNPC Board Chairman said this is just the beginning of a greater feat to be achieved by the NNPC Ltd.

He urged the management and staff members of the NNPC not to relent as more needed to be done to surpass the expectations of the shareholders of the company.

“This is just the beginning, we want to see more landmark accomplishments,” he added.

Reacting to the development, the spokesperson for Tantita Security Services Nigeria Limited, one of the private agencies supporting the government in security, Dr Paul Bebenimibo, said his firm had been working towards this for a while.

“From the beginning of this year, we have been saying that by God’s grace, we will get to the 2mbpd production. And we have actually put more measures in place. We’ve acquired more technologies to monitor the facilities so that there won’t be any disruption and production will continue to increase.

“So the 1.8mbpd that it has got to, certainly, by the end of the year, we’ll work to get to the 2mbpd. We are working. The NSA confirmed yesterday too, that the Niger Delta is very peaceful, things are working out fine there, and it’s a result of what we are putting in place that they have brought out this result.

“This milestone, as you know, was achieved in collaboration with the NNPC, the security forces, and, of course, Tantita, which has been at the forefront of oil pipeline protection in the Niger Delta. We are determined to take it to 2mbpd before the year runs out, as directed by the President of the Republic of Nigeria, working through the NNPC.”