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Nigeria’s oil output nears 1.6mbpd as cartel anticipates rising demand

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Though the Organisation of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) confirmed at the last meeting that they intend to proceed with the implementation of the agreement to gradually increase oil production over the next three months, anticipating that rise in global oil demand may push up output.

While OPEC’s April data showed that Nigeria pumped 1.548mbpd in April, the latest S&P Global Platts survey puts the country’s production at 1.6mbpd, above its 1.51mbpd quota under the production cuts agreement.

Iran pumped its largest volume of crude in almost two years in April, while non-compliance Russia also boosted its output yet again, bringing total production of OPEC+ to a three-month high, according to the latest S&P Global Platts survey.

The cartel is however optimistic that accelerating vaccination programmes and rising fuel demand will raise global oil demand by 5.95 million barrels per day (bpd), this year despite the current COVID-19 crisis in India, keeping its demand outlook unchanged from last month.

World oil demand is set to average 96.5 million bpd in 2021, OPEC said in its closely-watched Monthly Oil Market Report (MOMR) yesterday. This would be nearly six million bpd higher than the demand last year, with the acceleration expected in the second half of 2021.

OPEC revised down its estimates for global oil demand for the second quarter by 300,000 bpd due to lower-than-expected demand in North America in the first quarter and the COVID resurgence in India and Brazil. However, the organisation raised its outlook for oil demand for both the third and fourth quarters of 2021 by 150,000 bpd and 290,000 bpd, respectively.   

The higher anticipated demand in the second half of this year is the result of positive fuel data from the United States, while “the acceleration in vaccination programmes in many regions allows for optimism,” OPEC said.
 
Indeed, OPEC produced 25.28 million b/d, up 80,000 b/d from March; Russia and eight other non-OPEC partners in the group’s supply accord added 13.21 million b/d, an increase of 130,000 b/d, Platts survey found.
 
The rising output is a preview of the wave of OPEC+ crude set to hit the market over the next few months.

In anticipation of rising global oil demand, the alliance plans to roll back its quotas by 350,000 b/d in May, another 350,000 b/d in June, and 441,000 b/d in July, for a total of 1.14 million b/d rises.

Meanwhile, Saudi Arabia, which has been reining in an extra one million b/d to help support the market, has said it will end its voluntary cut gradually over that span, releasing 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July.

The country averaged production of 8.14 million b/d in April, the survey found, compared to its quota of 9.12 million b/d. Saudi Energy Minister Prince Abdulaziz bin Salman had called the additional cut a goodwill gesture to the rest of the alliance, with the hopes that quota compliance would improve. The survey indicates that several key countries failed to heed the call.

The 10 OPEC members with quotas under the deal and the nine non-OPEC allies achieved a conformity level of 111 per cent in April, according to Platts calculations. But take away the extra Saudi cut, and compliance falls to 96 per cent, which would be the lowest since July 2020.

Russia, the main non-OPEC partner, pumped 9.50 million b/d of crude, a rise of 160,000 b/d from March and well above its quota of 9.38 million b/d, with seaborne exports surging in the month.
 
Iraq, which produced 3.97 million b/d, and Nigeria, at 1.6 million b/d, also contributed to worsening compliance, hitting their highest levels since May 2020, driven by higher crude exports.
 
Two members exempted from quotas provided the largest swings within OPEC but in opposite directions.
 
Iran, under heavy sanctions by the US, appears increasingly emboldened as indirect talks progress towards a reinstatement of the nuclear deal, ratcheting up production in recent months and finding a steady customer in China, according to market sources. Its April output of 2.43 million b/d is a 130,000 b/d increase from March, and its highest since May 2019, according to the survey.

OPEC+ ministers plan to convene online June 1 to review market forecasts, adjudicate compliance, and decide whether to continue with their gradual easing of quotas. Dated Brent was assessed at $68.79/b on May 7, after hitting a nearly two-year high of $70.30 on May 5.

Under OPEC+ rules, countries that pump above their quotas must make up for their excess production by implementing so-called compensation cuts of equal volume by the end of September.

   

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Time Nigeria is a general interest Magazine with its headquarters in Abuja, the nation’s Capital.
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The Missing Middle of Infrastructure Finance: Why Capital Still Fails to Become Infrastructure

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  By Chidi Nwafor  In October 2023, a Gulf sovereign wealth fund quietly closed a $2 billion allocation to global infrastructure, earmarked in part for emerging-market energy and transport assets. The announcement drew the usual applause: another sign, commentators said, that institutional capital was finally waking up to the infrastructure opportunity in the Global South. Eighteen months later, less than a tenth of that allocation had actually left the fund’s balance sheet. Not because the mandate had changed. Not because the fund had lost appetite. According to two people familiar with the portfolio, the constraint was simpler and more uncomfortable: there were not enough investable projects to put the money into. This is not a story about a reluctant investor. It is a story about capital that wants to move, cannot find enough places willing and able to receive it in a form it can underwrite, and quietly waits instead. Multiply that fund by the hundreds of pension schemes, sovereign wealth vehicles, commercial banks and infrastructure funds now carrying dedicated allocations for emerging-market infrastructure, and a pattern emerges that rarely makes it into a headline: the world is not short of capital for infrastructure. It has capital in historic abundance, sitting adjacent to a historic infrastructure gap, unable to cross the distance between the two. The Comfortable Explanation  The explanation on offer at every major infrastructure summit is a familiar one. Global infrastructure investment needs run into the tens of trillions of dollars over the coming decade; committed capital falls well short; therefore, the problem is one of insufficient funding, and the solution is more of it: more pledges, more blended-finance facilities, more climate funds, more multilateral capital increases. It is a comfortable explanation because it assigns responsibility clearly to governments who under-fund, institutions who under-commit, and it offers a clean remedy: raise more. It is also, on close inspection, not what the evidence shows. Pension funds globally hold trillions in assets under management with explicit infrastructure allocations that remain structurally underweight, not because trustees have rejected the asset class but because deal flow meeting their risk and governance thresholds has not materialised at the pace their mandates assume. Sovereign wealth funds report the same pattern. Commercial banks with dedicated project finance desks describe pipelines that look full at the term-sheet stage and thin dramatically by financial close. Development finance institutions, whose entire purpose is to absorb risk that commercial capital will not, routinely report that their binding constraint is not capital adequacy but the volume of bankable transactions their teams can originate and structure in a given year. None of this fits the scarcity narrative. All of it fits a different one. Availability Is Not Deployability  Capital availability and capital deployability are not the same condition, and the conflation of the two is doing real damage to how the world thinks about the infrastructure gap. Availability asks whether money exists somewhere with a mandate that could, in principle, be pointed at infrastructure. Deployability asks something much narrower and much harder: whether a specific project, at a specific moment, has been engineered, structured, documented and de-risked to the point where an investment committee can approve it without exception. The first condition is met, overwhelmingly, across nearly every category of capital that matters to infrastructure. The second is met by only a small fraction of the projects competing for it. The result is a market that looks, from the outside, like a financing gap, and functions, from the inside, like a conversion problem: an abundance of capital on one side, an abundance of infrastructure need on the other, and an underbuilt set of mechanisms in between capable of turning one into the other at any meaningful scale. Where the Conversion Breaks  The break does not happen at the ends of the process. It happens in the middle, in the unglamorous sequence of work that turns a plausible concept into an instrument a fiduciary can sign. A promising transmission project needs a feasibility study rigorous enough to survive institutional scrutiny rather than optimistic enough to attract early interest. It needs offtake arrangements that hold up under real counterparty and currency risk, not the counterparty risk assumed in a base case. It needs environmental and social documentation calibrated to the standards of the institutions being asked to fund it, not the standards of the jurisdiction hosting it. It needs a legal and commercial structure that allocates risk in ways a commercial lender, not only a development financier, will accept. It needs a sponsor capable of executing what has been proposed, not merely capable of proposing it. Each of these is ordinary project finance discipline. None of it is exotic, and in mature infrastructure markets it happens as a matter of course, absorbed into systems built over decades: specialist advisers, standard-form contracts, established procurement norms, deep pools of transaction expertise. What is missing in the markets where the infrastructure gap is largest is not the standard itself but the machinery that meets it. Projects arrive at investment committees with ambition intact and preparation incomplete, and that gap is treated, again and again, as an individual project’s failure rather than what it actually is: a structural absence in the systems responsible for producing investable transactions at scale. The Missing Middle  This is the Missing Middle of Infrastructure Finance: the institutional architecture that sits between capital that wants to move and infrastructure that needs building, and whose incompleteness explains far more of the global infrastructure gap than any shortfall in committed funds. It consists of project preparation facilities able to fund feasibility and structuring work before commercial viability has been proven. Transaction advisers capable of building deals that satisfy development mandates and commercial return thresholds at once, rather than treating the two as separate constituencies to be managed sequentially. Risk-sharing and guarantee instruments that convert political, regulatory and currency risk into something a commercial balance sheet can underwrite. Aggregation platforms that bundle smaller, individually sub-scale projects into portfolios large enough to justify institutional transaction costs. Standardised documentation that reduces the bespoke legal cost of every new deal. And coordination across ministries, regulators and financiers robust enough that a technically sound project does not die in bureaucratic sequencing after the money has already been found. None of these are new ideas in isolation. What is missing is their assembly into a coherent system, deliberately funded and institutionally accountable, rather than scattered across donor-funded pilots that end when the grant does. The African Dimension  Africa makes this dynamic unusually visible, and consequently offers an unusually clear opportunity to correct it. The continent’s infrastructure financing need, by any measure, is vast. Less understood is that the shortfall is disproportionately one of preparation rather than capital. Nigerian gas-to-power, off-grid solar and mini-grid developers have each demonstrated that individual projects can clear the bankability bar; what has not emerged is systemic pipeline scale, a steady stream of comparably prepared projects large enough to absorb the capital already circling the sector. The pattern repeats, with local variation, from grid infrastructure in East Africa to transport corridors in West Africa. Interested capital is rarely the scarce input. Investment-ready projects are. The Global Comparison  Mature markets solved this problem gradually and mostly invisibly, through decades of institution-building that predates the current infrastructure conversation: specialist project finance units inside banks, standardised PPP frameworks, established regulatory playbooks, deep benches of transaction lawyers and engineers who move between deals rather than between one-off assignments. Emerging and frontier markets are not being asked to meet a lower standard. They are being asked to meet the same standard without having built the same machinery, and then being told, when deals fail to close, that the problem is insufficient funding….
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