Nigeria expects 22% jump in oil output by end-December
New Delhi, India | – OPEC member Nigeria expects its oil production rate to jump by 22% by the year-end to 2.2 million barrels per day (bpd) from current levels, its oil minister said on Monday, adding he hoped a force majeure on all its oil fields would be lifted by December or January.
Emmanuel Ibe Kachikwu, on a visit to New Delhi, also said Nigeria was likely to sign a cash-raising oil deal with India for $15bn by the end of this year. India’s oil ministry said that Nigeria, whose economy has been hit hard by low oil prices and militancy, had requested an upfront payment.
“Nigeria has a bit of a cash flow problem right now. Our reserves are not as strong as we want them,” Kachikwu told reporters on Monday. “The impact of that is the value of the naira (currency) is coming down. So what we are trying is to leverage on the assets we have to receive immediate cash.”
He said the Organization of the Petroleum Exporting Countries, which has agreed to cut world output to rescue prices, has however allowed a production window of 1.8 million bpd to 2.2 million bpd for recession-hit Nigeria.
The Nigerian economy is in recession for the first time in decades this year, in large part due to low oil prices, and the country is facing a possible debt crisis. Its budget deficit, estimated at some USD 5.7 billion, looks only set to increase due to stagnant growth, ratings agency Fitch said on Monday, and the government has recently sought USD 4.1 billion in loans from the African Development Bank in order to recapitalise. Fitch cut Nigeria’s credit rating from BB- to B+ in June.
Apart from the impact of low oil prices, whose sales account for 70% of the Nigerian government’s revenue, the country’s energy facilities have been crippled by attacks by militants calling for a greater share of the country’s oil wealth.
Relentless attacks have taken out pipelines in Nigeria, normally Africa’s largest oil exporter, and Qua Iboe, Nigeria’s largest export stream, and Forcados remain under force majeure.
Kachikwu, who said oil prices would rise from current levels by December, met Indian oil minister Dharmendra Pradhan to discuss expanding energy ties between the two countries.
In the last fiscal year ended March 31 Nigeria accounted for nearly 12% of all crude oil imports by India, one of the fastest growing economies and energy markets in the world.
“We agreed on significant potential for diversifying (India’s) engagement in to E&P (exploration and production), refinery building & marketing in Nigeria,” Pradhan said in a tweet.