Nigeria to Boost Oil Output as US Headed for Record December Production

The IEA once again predicts the Americans' fortunes will wan in the 2020s. File Image / Pixabay

Earlier this week, in addressing the concern that the world is once again swimming in oil, the Organization of the Petroleum Exporting Countries (OPEC) was optimistic that Nigeria and other countries would be amenable to its possible return to cutbacks; but on Tuesday the Nigerian state oil firm NNPC said it would in fact be boosting output next year.

That message was delivered by Maikanti Baru, managing director of NNPC, who told Reuters that his company will increase its oil production to 1.8 million barrels per day (bpd) in 2019 and raise condensate production to 0.5 million bpd, to augment the 1.6 million bpd of oil and 0.4 million bpd of condensate his country currently produces.

This will be achieved because NNPC is in the final stages of talks with energy majors and oil services companies to revamp its long-neglected oil refineries, and Baru said deals - potentially with Shell and ExxonMobil - will be signed later this month.

While Nigeria's stance further brings into question OPEC's ability to effectively reverse course and return to its earlier state of crude output reductions, activities in the U.S. raise the question of whether its cutbacks would have much effect in the global scheme of things.

The U.S. Energy Information Administration on Tuesday reported that crude output from seven major shale basins was expected to hit a record of 7.94 million bpd in December: total output from the basins was expected to rise 113,000 bpd, driven largely by increases in the Permian Basin of Texas and New Mexico, where output was forecast to climb by 63,000 bpd to about 3.7 million bpd.

But even though U.S. shale has continued to prove skeptics wrong, its most persistent skeptic, the International Energy Agency, remains unfazed, and in its new annual World Energy Outlook it insists that by the mid-2020s the richest American fields will have been fully exploited, and production will drop by about 1.5 million bpd in the 2030s.

The IEA stated, "After 2025, members of OPEC are central to meeting oil demand growth."

The agency also noted that "There is more than 3.5 million barrels a day of tight oil production from areas outside the U.S. in 2040," including in places such as Argentina, Russia, Canada, and Mexico.

But the IEA's findings still support the notion that there will be more than enough oil on the planet to satisfy all needs, and in this regard it is consistent with its outlook last month, when the agency joined France's Total and Goldman Sachs in assuring the analytical community - which was then worried about lack of supply and possible $100 per barrel prices - that oil supply and demand is robust.