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Nigeria To Earn $10.61bn In Eight Months

Nigeria is set to earn the sum of $10.61bn from crude oil sales within May and December this year after the latest decision by members and non-members of the Organisation of Petroleum Exporting Countries (OPEC) to cut production.

The country is also set to earn $22.74 billion from crude oil between January 2021 and April 2022 according to the volume of crude oil cuts to be implemented by Nigeria during the 16 month period as decided by the OPEC. These earnings are all centered on the $30 per barrel average price of Brent, the crude oil against which Nigeria’s oil is priced.

In Nigeria the crude oil prices based on 2020 budget was based on the $57 to $30 after the slash in the global oil prices due to the COVID19 pandemic.

In OPEC’s agreement, Nigeria is to join the group to cut the supply by 9.7 million barrels per day between May and June 2020, eight million barrels per day amid July and December 2020 and six million barrels per day from January 2021 upto April 2022.

Timipre Sylva, the Minister of State for Petroleum Resources, clarified that based on reference productions of Nigeria for October 2018 of the 1.829 million barrels per day of dry crude oil, Nigeria would now start producing 1.412 million barrels per day, 1.495 million barrels per day and 1.579 million barrels per day respectively for the matching periods in the agreement.

According to Sylva’s explanation, Nigeria will be producing about 42.36 million barrels for the month and also produce the same volume in June, making 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 oil 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.

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