Nigeria’s crude output drops to 1.25mbpd in May

Nigeria's crude oil output has experienced a decrease, with data from the Organisation of the Petroleum Exporting Countries revealing a 30,000-barrel drop to 1.25 million barrels per day in May. Despite this setback, there are promising developments in the country's energy sector that offer hope for the future. In a recent interview on CNBC Africa, Chinnan Dikwal, the Vice Chair at the African Energy Council, delved into these developments. One of the significant advancements is the signing of a Project Development Agreement between the Nigerian National Petroleum Company Limited and Golar LNG for the deployment of a Floating Liquefied Natural Gas in offshore Nigeria. The aim is to reach a final investment decision before December this year. This initiative represents a strategic move to leverage Nigeria's natural gas resources and diversify its energy portfolio. Dikwal highlighted key insights from the OPEC monthly oil report for May, emphasizing global oil demand forecasts and the steady growth expected in non-OECD economies, particularly driven by Asian countries like India and China. While there is optimism for global oil demand growth, the focus shifted to Nigeria's production challenges. Nigeria's current oil output falls short of the 2024 budget benchmark of 1.7 million barrels per day, posing a concern for the economy. Despite this, recent developments in oil production, such as the ramp-up of production at OML 13 in Akwa Ibom, have shown promise. Dikwal pointed out that the recent numbers indicate an increase in Nigeria's oil production to around 1.42 million barrels per day, signaling a positive trajectory. Looking ahead, discussions turned to OPEC's strategy to maintain higher oil prices, particularly aiming for stability around the $80 mark. However, considering the changing macroeconomic landscape with rising inflation rates and economic challenges, the sustainability of this strategy is up for debate. Dikwal suggested that OPEC may revisit its production cuts around September, depending on market conditions and global economic outlook. He noted that interest rate cuts in various countries could boost oil demand, potentially impacting OPEC's decision on production levels. Overall, the conversation with Chinnan Dikwal provided valuable insights into the complex dynamics shaping Nigeria's oil industry and the broader global energy landscape. While challenges persist, new initiatives and cautious optimism offer a glimpse of hope for the future of Nigeria's energy sector.