The Nigerian National Petroleum Company (NNPC) Limited says that by 2023, Nigeria’s oil production may average 2.2 million barrels per day (bpd), including condensate.
Mele Kyari, Group Chief Executive Officer (GCEO), NNPC Limited, spoke in an interview session at the UAE’s 13th Global Virtual Energy Forum on Wednesday.
In 2022, Nigeria’s oil production was relatively low and the country missed the production target set by the Organization of the Petroleum Exporting Countries (OPEC) for the full year.
In August 2022, oil production paste a record low of 972,394 bpd, and fell further to 937,766 bpd in September.
However, in the last quarter of the year, production began to constantly increasereaching 1.23 million bpd in December 2022.
Speaking during the interview, Kyari said there is supply shortage globally and no country is producing enough to close the supply gap.
“But definitely, even if you want to bring production back tomorrow, you can’t because that’s not how it works,” he said.
Kyari said that when making an investment in the industry, it requires “a gestation period of probably a minimum of 34 months.”
‘SAFETY CHALLENGE OBSTACLE OIL PRODUCTION IN 2022’
However, he added that Nigeria is making efforts to restore optimal production.
“In our case, we have a different challenge than the lack of investment in the last four or five years. There has been no investment in the last four or five years. That’s right. That is true in many other jurisdictions where cash flows do not support the investment,” he said.
“In our case, we had a different challenge, a security challenge, which became very manifest at the beginning of 2022. And of course, we took definitive measures to recover production and this is paying off.
“For example, around July, our net crude oil excluding condensate was down to around 1 million bpd. That is the lowest in the history of our country and our industry.”
Kyari added that the practical steps taken by the federal government to address issues related to pipeline safety have led to a significant recovery in Nigeria’s oil production.
“So for us, we see a trajectory of restoring production, including condensate, within the year. We definitely think we can hit our 2.2 million bpd target, but our OPEC target is 1.8 million bpd, but we know it’s practical to do 2.2 million within 2023,” the chief of NNPC.
He revealed that there is construction work underway on some of NNPC’s pipelines “that will clearly make 1.8 million bpd very easy to achieve.”
‘THE SUBSIDY ON FUEL IS A GOVERNMENT DECISION’
Speaking about the gasoline subsidy, Kyari said that the issue has always been a decision of governments around the world and is practiced in different ways.
“Anywhere in the world where you have a subsidy, you have to manage arbitrage across your borders by your supply chain partners and so on,” he said.
“NNPC is becoming a completely private company today, owned by the government, but operating like any other company in the country: like Chevron and any other company you can imagine. So our relationship with the government today, in terms of fuel supply, is commercial.
“There is a service level agreement between us and the government to supply fuel and then sell it at the price that the government policy decision has asked us to do. So it’s not a problem at all for us as a corporate company.
“It is value for us. We are delivering products to the country. We have enough cash flow to support this and there is a relationship between us and the government.”
‘REFINERY REHABILITATION IS A BUSINESS DECISION’
Kyari noted that the country currently has no problem importing petroleum products, adding that this is due to the rehabilitation exercise at the country’s refineries.
“We do not see any challenge in delivering products to our country considering the fact that almost 100 percent of our oil is required to be imported due to the very fact that we have decided to rehabilitate our four refineries in one fell swoop and That’s right. do,” he said.
The NNPC chief noted that the rehabilitation exercise was a “very clear business decision”.
“And as soon as we’re doing this (as we all know on this platform), local production gets you closer to supply and that eliminates energy security issues,” he said.
“NNPC is very comfortable with what we are doing now. [And] wWe do not see any danger in supplying our country. We are complying with all our applications. We do not have any payment problems with our providers.
“And of course, as we’re seeing increasing crude oil production and condensate production, we know that ability to pay won’t be an issue for us either.”
Meanwhile, Kyari said the new Dangote refinery, along with three other refineries, will start operations in the middle of the year.
He said that when these facilities come online, Nigeria’s domestic capacity would be around 1.1 million bpd.
“When we do this, we will exceed our domestic demand, so there will be a reversal of the flow and Nigeria will become an exporter of products,” he said.