Nigeria’s total oil production increased by 210,000 barrels a day (b/d) in January 2022 to 1.68mn b/d, which was in line with the OPEC quota, for the first time since July 2021.
Nigeria’s total liquids production (crude and condensates) fell by 650,000 b/d since the onset of the pandemic in March 2020, to 1.47mn b/d in December 2021.
The slide is a function of the underinvestment in the sector over the past couple of years.
The start of operations at the Dangote oil refinery in 3Q, 2022, as stated by the chairman of Dangote Industries Limited, Aliko Dangote, in January at a briefing at the plant site in Lagos implies an increase in activity in the oil refining sector – which has been on the decline for 11 consecutive quarters – and could be positive for the oil sector amid higher oil prices.
The high oil price is a boon for Nigeria’s external sector, according to analysts at Renaissance Capital.
“At $80/bl, Nigeria’s CA surplus will increase to 1.2% of GDP in 2022, on our estimate, from 0.8% in 2021E. This will further bolster FX reserves, which increased by $5.1bn to $40.5bn in 2021 on the back of the IMF’s SDR allocation of $3.4bn, eurobond proceeds of $4bn, and oil export earnings that increased by 22% YoY to $28.9bn in 9M21, on the back of a stronger oil price.”