Crude oil production in Nigeria, which constitutes approximately two-thirds of government revenue and 90 percent of the country’s foreign exchange reserves, experienced a year-on-year contraction of 13 percent in the fourth quarter of last year, according to the Nigerian Bureau of Statistics (NBS). The bureau’s latest report indicated that Nigeria’s average oil output fell to 1.3 million barrels per day (bpd) in the fourth quarter, a decline from the daily average of 1.5 million bpd recorded during the same period in 2021.
The NBS noted that while the agriculture sector showed growth, its performance was significantly hindered by severe flooding across the country. Additionally, the industrial sector faced challenges, recording a growth rate of -0.94 percent and contributing less to the overall GDP compared to both the third quarter of 2022 and the fourth quarter of 2021. The rising price of diesel, which many businesses depend on for electricity generation, has further exacerbated production costs in Nigeria, driven by high global oil prices.
Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, recently attributed the low crude oil production levels to vandalism of oil pipelines, which has led to significant theft. This report from the NBS coincided with the Organization of the Petroleum Exporting Countries (OPEC) Monthly Oil Market Report for January, which highlighted an upward trend in Nigeria’s oil rig count over the past year. The country’s rig count increased from nine in the third quarter of last year to 13 as of January this year. In contrast, Nigeria’s rig count was 16 in 2019, dropped to 11 in 2020, and further decreased to seven by the fourth quarter of 2021. It rose to eight in the first quarter of 2022, reached 10 by the second quarter, and increased to 11 by July 2022, before falling back to nine in the third quarter of 2022. However, it has been on a consistent rise since the fourth quarter of last year.
Further analysis of Nigeria’s crude oil production revealed a gradual increase, with output rising from 900,000 bpd in the third quarter of 2022 to 1.1 million bpd in the fourth quarter, and maintaining at 1.2 million bpd in December 2022 and January 2023, according to OPEC data from direct sources. During the official transition ceremony for the Nigerian National Petroleum Corporation (NNPC) to NNPCL held in Abuja, Kyari stated that the country is on track to achieve a crude oil production level of 1.8 million bpd as designated by OPEC. Over the past two years, Nigeria has struggled to meet OPEC’s production quotas due to pipeline vandalism and oil theft.
Kyari emphasized that as of the previous day, Nigeria had surpassed 1.6 million bpd, asserting that reaching the quota of 1.8 million bpd is within reach. He expressed confidence that this goal could be achieved in two to three months, which would help restore investor confidence, attract partners for investment, and ultimately foster growth in the sector.
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