Weak demand and high storage…
Oil prices jumped on Monday…
Nigeria received distributable revenues of $1.53 billion (467.81 billion naira) in March thanks to higher royalty income from the oil industry and better international prices. At the same time, however, revenues from crude oil exports fell by $6.4 million last month, on the back of lower shipments abroad, the government said in a statement.
The decline in exports itself was caused by lower production – the result of last year’s pipeline attacks that required the temporary shuttering of infrastructure, including the Forcados terminal. Now the infrastructure is coming back on line and Nigeria plans to boost its oil production further, which it can freely do as the country is exempt from the OPEC oil output cut agreement.
Earlier this month, the federal government reported that the average output in March was affected by the suspension of production at the Bonga field, which pumps some 225,000 bpd. After maintenance at the field is completed, Nigeria will continue to pursue its plan of boosting daily crude output from 1.27 million bpd last month to 2.2 million bpd by the end of the year.
Nigeria’s Oil Minister Emmanuel Ibe Kachikwu told Bloomberg in an interview that he hoped the other OPEC members would agree to an extension so international benchmark prices could remain above $50 a barrel. Nigeria will join the market rebalancing efforts as soon as it returns to the daily production rate from before the string of militant attacks that crippled its oil industry over the last two years.
Meanwhile, the government has also been tackling the militant activity problem with marked success as evidenced by the cessation of attacks in recent months. At the same time, Abuja is trying to deal with another problem in the Niger Delta: illegal refineries. The government has now decided to incentivize the outlaw refiners instead of destroying the facilities. Last month, media reported a decision from last month to supply crude oil to illegal refineries at a ‘reasonable price’, as an incentive to keep them from trying to break pipelines or vandalize facilities to get oil.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.