Nigeria’s oil output dips to 1.68mbpd as crude sells for $94

Lower crude prices don’t translate to cheaper petrol prices, says Marketers

Nigeria’s crude oil and condensate production declined by 1.7 per cent month-on-month to 1.68 million barrels per day (mbpd) in October, even as international oil prices rebounded to nearly $94 per barrel amid renewed uncertainty over the conflict involving Iran and the United States of America.

However, petroleum marketers have said a fall in crude oil prices does not automatically lead to cheaper petrol at the pump, following a call by the Federal Competition and Consumer Protection Commission (FCCPC) for operators to pass on the savings to consumers.

Data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday showed that the country produced an average of 1,687,710 barrels per day of crude oil and condensate during the month, compared with 1.72 million barrels recorded in September.

Despite the decline, Nigeria maintained its compliance with the Organisation of Petroleum Exporting Countries (OPEC) production quota for the sixth consecutive month.

Nigeria had produced 1.53mbpd in May, 1.55mbpd in June, 1.51mbpd in July, 1.5mbpd in August and 1.53mbpd in September, sustaining its production above or at the country’s assigned quota over the six-month period. Daily production, including condensate, peaked at 1.79mbpd in October, while the lowest output stood at 1.60mbpd.

NUPRC attributed the relatively stable production performance to improved operational stability, production uptime and crude evacuation efficiency, alongside efforts by operators to strengthen asset integrity and production reliability.

A breakdown of output by terminals showed that Forcados accounted for the largest share, with an average daily production of 318,490 barrels, followed by Bonny with 311,020 barrels. Qua Iboe recorded 173,970 barrels per day, while Escravos posted 134,670 barrels. Bonga ranked fifth, with an average production of 106,650 barrels per day.

The production figures emerged as international crude oil prices staged a sharp recovery yesterday following renewed concerns that the conflict involving Iran and the U.S. could persist, threatening crude supplies from the Middle East.
FCCPC had said on Tuesday that Brent crude retreated from a September peak of $115 per barrel to below $90, and that refiners and marketers should reflect the lower costs in petrol and diesel prices without undue delay.

Responding yesterday, the National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, said many factors affect pump prices besides crude. He explained that petrol prices tend to rise quickly when crude costs go up but fall more slowly.

He added that because petroleum imports and refining inputs were priced in dollars, a weak naira could keep landing and wholesale costs high, even when global crude prices fall.

According to the National Secretary of the Petroleum Dealers Association of Nigeria (PEDAN), Ibrahim Yahaya, it takes days to weeks for a drop in crude prices to flow through cargo pricing, refining and depot delivery.

He said pump prices also include refining margins, transport and handling costs, and local taxes, not crude oil alone.

The operators said these cost elements explain why pump prices do not move in step with the international market, and they asked the commission to engage them so they could better understand how the downstream sector works.

The FCCPC said it would work with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to monitor wholesale and retail prices.