One week after the National Assembly passed a revised 2020 budget pegging daily oil production at 1.8 million per barrel, Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, has revealed that daily production quota has reduced to 1.4 million per day.
He spoke during an interactive hearing on “Exiting Petroleum Subsidy: Ensuring Self-Sufficiency in Domestic Refining of Petroleum Products” by the Joint Senate Committee on Petroleum Resources (Upstream and Downstream).
According to the NNPC, there will now be a daily shortfall of 400,000 barrels per day and a yet-to-be disclosed financial loss that will result from the reduction.
A substantial part of the revised budget is expected to be funded with money generated from sale of crude oil, while the rest will be sourced through borrowing.
He said: “We have never seen this price collapse in the history of oil industry. The price fell from $50 per barrel to less than $10 and no country was prepared for this. Nobody saw it coming. The result of this is revenue collapse, because there is a direct correlation.
“Today, in our effort to ensure price stability in collaboration with the rest of the world, our daily crude oil production was reduced at 1.48 million barrels per day.
“In the revised budget passed by the National Assembly, the daily crude oil production was put at 1.8million barrels per day, the GMD said the country can only produce 1.7 million.” He said it was impossible to reach 1.8 million barrels per day in two to three months, until the global economy picks up and demand increases.
“We are better off producing 1.7 million and once the price gallops up to $45, we can accommodate the difference,” he said. On subsidy, he said: “There are several attempts in the history of this country to walk away from subsidy on petroleum. Until March this year, there were no subsidy on aviation fuel, but the one we couldn’t walk away from is subsidy on PMS.” The NNPC boss said he was unaware of the country’s daily fuel consumption, but added that he can only confirm the quantity lifted from depots by truck drivers.