Bank-Anthony Okoroafor, an energy expert, says the projected 2.3 million barrel of crude oil production per day and $60 oil benchmark in the 2019 budget were not realistic.
Okoroafor in an interview with the News Agency of Nigeria in Abuja on Sunday, said the projection does not follow the uncertainties in the global oil market.
He said: “Production of 2.3 mbpd projection for 2019 may not be realistic owing to OPEC’s plan to cut production in order to shore up prices and growing crude inventory and excess supply verse demand.
“The benchmark price of 60 dollar used for the budget is not smart based on all the uncertainties and volatility surrounding the price of oil and surplus production.”
According to him, the reality today is $59 per barrel.
Okoroafor added that the global crude oil price would average $61 a barrel in 2019 according to the short- term energy outlook by the US Energy Information Administration.
He said: “The estimate is 11 dollar per barrel lower than the EIA prediction just a month ago.
“The forecast dropped after oil prices dipped below $50 a barrel in November, the average for the month was $65.
“They believed higher U.S. supplies will flood the market at the same time slowing global growth and will cut into demand. Saudi Arabia and Russia had also produced oil at record levels.
“On December 7, OPEC agreed to cut 1.2 million barrel per day from the October levels. Members will cut 800,000 barrels per day and allies will cut 400,000 bpd. Cuts will continue for six months.
“OPEC’s goal is to return prices to 70 dollars a barrel by early 2019. Will this happen based on the volatility of oil prices today? Only time will tell.”
Okoroafor further stressed that government must consider all of the uncertainties in the global market noting that the volatility of oil prices would continue in 2019.
He added that the US average daily production would rise to a record level of 12.1 million barrels per day in 2019 from 9.4 mbpd in 2017 and 10.9 mbpd in 2018.
He said that the US shale producers became effective that they were profitable at $30 per barrel, adding that production from West Texas alone would increase by two million bpd in 2019
Okoroafor said: “The oil wells in Gulf cannot stop producing even at low oil prices. OPEC has not been willing to cut output enough to rebase the oil price.
“Members do not want to lose market share to U.S. companies.
“Increased U.S. production in 2019 means OPEC will no longer have the clout to control prices.
“Finally, global demand for oil will drop in 2019 as China, which consumes 12 per cent of the global oil production, has slowed down.
NAN.
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