There were indications on Thursday, that the total oil output by the Organisation of Petroleum Exporting Countries (OPEC) rose in August, as Nigeria boosted its total production on the back of the return of Forcados, while Iranian supply rose to its highest since 2018.
A survey found that despite ongoing cuts by Saudi Arabia and other members of the wider OPEC+ alliance to support the market, Nigeria emerged second in the list of countries that increased output.
OPEC pumped 27.56 million barrels per day (bpd) during the month under consideration, the survey found, up 220,000 bpd from July. That would be the first rise since February, according to the survey.
“The second-largest increase in OPEC output this month came from Nigeria, where exports resumed from the Forcados terminal after a shutdown, the survey found.
“OPEC’s output is still undershooting the targeted amount by almost 800,000 bpd mainly because Nigeria and Angola lack the capacity to pump as much as their agreed level,” the report added.
For context, although the report did not state the actual volume produced by Nigeria in August, the country in July managed to drill only 1.08 million bpd as against the 1.742 million bpd quota allocated to it by OPEC.
The situation had recently worsened Nigeria’s struggling economy with the National Bureau of Statistics (NBS) showing in its latest report that the oil sector contributed a paltry 5.34 per cent to real Gross Domestic Product GDP (GDP) in Q2, 2023.
Despite the billions of naira spent on curbing oil theft, which the country blames for the current situation, not much has been achieved. Production has simply hovered between 1 million bpd and 1.25 bpd in recent months. The country continues to lose over 400,000 bpd to underproduction on a daily basis.
In what appears to be a prolonged lack of capacity to tackle the problem by the security forces, the federal government through the Nigerian National Petroleum Company Limited (NNPC), last year contracted local security groups, including the one led by a former Niger Delta militant, Government Ekpemupolo, also known as Tompolo.
But aside from Nigeria, which managed to increase production, Iran which is exempt from OPEC cuts and its exports have seen its volume rise in 2023 despite United States sanctions, although views differ as to the exact scale. The overall development, some analysts say, is adding to OPEC+’s challenge in managing the market.
Output from the 10 OPEC members that are subject to OPEC+ supply cut agreements edged lower by 10,000 bpd, the survey found. Saudi Arabia and other Gulf members maintained strong compliance with agreed cutbacks and extra voluntary reductions.
Top exporter Saudi Arabia kept August output within a whisker of 9 million bpd, the survey found, as the country extended a voluntary 1 million bpd output cut for a second month to provide extra support for the market.
Iranian oil output hit 3.10 million bpd in August, being the highest since 2018, the year Washington re-imposed sanctions on Iran, according to the Reuters survey and separate figures from OPEC.
Analysts have said the higher exports appear to be the result of Iran’s success in evading US sanctions and Washington’s discretion in enforcing them as the two countries seek better relations.
Meanwhile, six months after becoming the Chief Executive at Shell Plc, Wael Sawan quietly ended the world’s biggest corporate plan to develop carbon offsets, the environmental projects designed to counteract the warming effects of CO2 emissions.
In an all-day investor event in June, Sawan had laid out an updated strategy for the European oil major that included cutting costs and doubling down on profit drivers like oil and gas.
As important was what he omitted: any mention of the company’s prior commitment to spend up to $100 million a year to build a pipeline of carbon credits, part of the firm’s promise to zero out its emissions by 2050, Bloomberg reported Thursday.
Those goals for the offsets programme have been retired, the company confirmed, along with the plan to harvest a whopping 120 million carbon credits annually by the end of the decade from projects that sequester carbon with trees, grasses or other natural resources, many of which Shell would develop itself.
That would have accounted for about 10 percent of the company’s emissions. It hasn’t made public any new targets for developing offsets or specified how it now plans to deliver on its future climate commitments.
The pullback reflects both Sawan’s renewed commitment to the oil and gas business that generates most of Shell’s profits, and an admission that the prior goals were simply unattainable.
It’s a newly damning indictment of offsets, which have become an important if controversial “climate solution” for most big companies, it said.
Bloomberg New Energy Finance estimates the voluntary carbon market, which today totals around $2 billion today, could grow as high as $950 billion by 2037.
Flora Ji, a 17-year Shell veteran, has run the company’s “nature-based solutions” operations since 2021. In an interview before Sawan scrapped the official, 120 million-offsets-per-year target, she said everyone knew it was a big number.
Meanwhile, the carbon market hadn’t expanded rapidly enough to meet rising demand, she said. “It didn’t have that kind of huge, exponential growth we expected,” Ji said.
Ji declined to respond to further questions after Sawan announced the company’s new direction.
Nigeria, which earns over 90 per cent of its foreign exchange front oil exports, has pledged to hit net zero by 2060. It’s unclear how it intends to achieve that.
Emmanuel Addeh
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