The maiden edition of the Annual Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) summit takes place amid seismic shifts and grave concerns for the industry. Oil markets have been more closely watched this year-2022, as its market fundamentals have been the single most important drivers of high inflation levels and tightening monetary policy by major central banks. Oil prices recovered to $80.00/bbl. by year-end 2021 after turning negative in Apr-2020. These elevated prices were expected to boost or complement efforts towards energy transition in the near term through capital discipline by oil producers. However, the sanctions placed on Russian energy following its conflict with Ukraine pushed Brent oil futures to as high as $127.98/bbl. in Mar-2022, although they currently range between $82.86 - $97.92/bbl.
 
Given the compounding risks - stronger economic headwinds, disruptive market forces and the liquidity crunch in the current oil market, plus the need to support the market’s stability, OPEC+ agreed to adjust the production level in Nov-2022 to 41.9mb/d downwards by 2.0mb/d from its Aug-2022 production levels. Nigeria's decreased OPEC+ agreement output puts the nation’s monthly quota at 1.7mbpd in Nov-2022 (previously 1.8mbpd in October). However, the nation’s monthly quota remains significantly above current production levels, which was reported at 972.4kbpd in Aug-2022, further falling 3.5% m/m to 937.8kbpd in Sept-2022 according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). It is lower than the 1.2mbpd averaged from Jan- to Jun-2022, and 47.9% below her OPEC+ production quota.
 
Going forward, we expect legacy inhibitions to continue to hamper production levels and CAPEX investments in Nigeria's upstream oil and gas sector sector. At this year's PENGASSAN Energy and Labour Summit, stakeholders are confronted with the troubles brought by oil theft and vandalism, troubles set to cause more International Oil Companies to divest from Nigeria. Nonetheless, there is renewed optimism as the Group CEO of the Nigerian Petroleum Company Limited (NNPC) announced that the Trans-Forcados Oil Pipeline System would come on stream next week. Closed for months, the Niger Delta's 2nd most extensive pipeline network with access to over 20 oilfields will be a major boost to Nigeria's crude oil production if actualised.