The Lagos Chamber of Commerce and Industry (LCCI) has warned that the 2021 economic outlook for Nigeria’s oil and gas sector is not very bright despite predictions of higher oil prices.
The business group led by Muda Yusuf, director-general, is projecting that Nigeria would likely have lower oil production in 2021, thanks to a cautious approach by Organisation Petroleum Exporting Countries (OPEC) and allies members due to the uncertainties around covid-19 pandemic and global oil demand.
“We expect oil & gas sector growth to be subdued in 2021 on the continued implementation of OPEC+ Declaration of Cooperation and weak oil price outlook,” Yusuf told BusinessDay.
The LCCI’S boss noted that the increasing preference for renewable energy globally will put downward pressure on crude demand and oil prices.
“We are not optimistic of a significant growth performance in oil industry in the year 2021,” LCCI’S boss noted.
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Nigeria’s oil sector contracted by 13.89percent in Q3- 2020 compared to 6.63percent in Q2-2020 due to Nigeria’s commitment to OPEC+ declaration of cooperation. As such, oil production fell to 1.67 million bpd in Q3-2020, the lowest since Q4-2016.
“The oil sector will further contract in Q4-2020 in the light of lower production in compliance to OPEC+ agreement. Oil production is expected to be within the region of 1.60 – 1.69 million bpd in-q4 2020,” Yusuf said.
According to OPEC data, Nigeria’s crude production (excluding condensates) stood at 1.34 million bpd and 1.32 million bpd in October 2020 and November 2020, respectively.
OPEC+ agreed to ease supply cuts by 0.5 million bpd starting from January 1, 2021 due to sluggish recovery in fuel demand, much lower than 2.0 million bpd earlier planned.
Concerning outlook for oil price, Yusuf said global oil demand is expected to remain subdued in the first half of year 2021 considering the resurgence of covid-19 pandemic in Europe, America, and parts of Asia.
