Kareem Jubril, energy analyst, Ecobank Plc has stated that “It is very difficult to see any path for crude oil price returning to 3Q:2018 level”.
In a series of tweets monitored by PETROLGAS REPORT earlier today, he noted that despite Total’s Egina field recently achieving first oil thereby increasing Nigeria’s production by 10 per cent in 2019, Nigeria under OPEC’s 1.2million production cut agreement is expected to keep OIL production at 1.738mln/day (excluding other liquids).
He said,”The development will take Nigeria’s total liquid (crude oil, condensate etc) above 2.1mln b/day in 2019.
” This is still below the proposed budget benchmark of 2.3mln b/d. Brent benchmark started 2019 hovering about $53/b.
“$7/b below the proposed 2019 budget benchmark of $60/b.
While increasing demand remain a major boost for crude oil in 2019 (barring any further escalation in trade war), the level of expected additional supply is worrying.
” The US is expected to add between 1 – 2 mln b/d of crude oil over the next two years,” he said.
Speaking further, he said the drop in crude price is an opportunity to do away with subsidy.
“Subsidy incurred on PMS is at its lowest level in a year.
“The drop in crude oil price is presenting Nigeria with another great opportunity to do away with government subsidy.
” Average price in 2019 will most likely be between $10 – $30/b lower than 2018 level.
Average brent in 2018 was $71.6/b
Estimate put current subsidy on PMS at between N20 and N35 / litre.
Translating to full cost reflective pump price of N165 – N180 / litre for PMS or a little bit higher if all government agencies appropriately charge all fees on the product,” he added.