Emmanuel Addeh in Abuja
Nigeria’s total oil production shortfall hit 94.5 million barrels in the first half of 2023, according to a THISDAY analysis of latest data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
In monetary terms, the output slump would be an estimated gross revenue loss of $7.1 billion, at an average oil price of $75 per barrel during the period between January to June this year.
The significant output shrinkage which is below the target set for the country by the Organisation of Petroleum Exporting Countries (OPEC) in the first six months of 2023, also led to a production of just about 57 per cent of total projected output during the period.
The review indicated that whereas the country was expected to drill an estimated 313.56 million barrels during the period, given a 1.742 million daily OPEC production quota, it only managed to produce 219 million barrels. This left the country with an estimated 94.5 million barrels deficit.
It also meant that the nation was unable to produce up to 43 per cent of OPEC’s output forecast for the period, a continuation of the production shortfall, which became pronounced since mid 2020 in the aftermath of the Covid-19 pandemic.
Nigeria is at the moment, desperately in need of foreign exchange as currently reflected in the weakening value of the naira to the dollar and inability of foreign investors, especially airlines to repatriate funds to their countries of origin.
A few weeks ago, OPEC slashed Nigeria’s production baseline to 1.38 million barrels per day for 2024 due to the prolonged inability of the country to consistently meet its quota for the commodity. Nigeria gets over 90 per cent of its foreign exchange earnings from the export of the commodity.
But according to the NUPRC data, in all, out of the over 52.26 million barrels expected monthly volume of oil output, the country’s production was 39 million barrels in January, 36.5 million barrels in February and 39.3 million barrels in March.
April was the most-hit in terms of the low volume of oil drilled, with Nigeria only able to produce 29.95 million barrels out of the 52.3 million barrels expected cumulative production for the month.
In May, the country produced 36.69 million barrels to continue the country’s deficit run while in June, it struggled to raise production to 37.4 million barrels for the entire month.
Although production continues to drag, oil price has been relatively stable in 2023. This year, the key assumptions in the country’s 2023 budget include an oil price benchmark of $75 per barrel; exchange rate at N435.57 per dollar; oil production of 1.69 million barrels per day and inflation rate of 17.16 per cent.
Production from most of the terminals continued to struggle in June, according to the NUPRC data, with crude oil volumes from Bonny slumping from 2.9 million barrels to 2.7 million barrels during the period.
Also, Qua Iboe fell from 4 million barrels in May to 3.7 million barrels in June, while production at the Escravos terminal shrank from 4.6 million barrels to 4.3 million barrels between May and June.
Odudu also curtailed production from 3.2 million barrels to 3.1 million from May to June while output from Tulja-Okwuibome fell from 1.1 million barrels the previous month to 1 million in June. Bonga also dropped in production from 3.9 million barrels to 3.7 million barrels.
However, it was cheering news from Forcados which ramped up production from 6 million barrels to 7 million barrels at the terminal even as volume from Egina grew from 2.6 million barrels to 2.7 million barrels during the month.
Despite the continuing shortfall in the OPEC production quota, the NUPRC data showed that overall, month-on-month, Nigeria’s crude oil output grew by 65,000 barrels per day in June, to hit 1.25 million barrels daily output.
Beside other several challenges, Nigeria has had to battle the menace of oil theft and pipeline vandalism as well as waning investment in the oil sector, in the last few years, developments, which have hobbled oil production in the country.
But recently, the federal government fixed November this year to hit the 1.74 million bpd OPEC allocation.
Permanent Secretary of the Ministry of Petroleum Resources, Mr Gabriel Aduda, who currently doubles as the highest ranking official in the ministry, said the 400,000 bpd loss, going by a THISDAY’s estimation, will be met in months.
“It’s every country’s dream to be able to cap and max out on production. And that is what Nigeria is doing at the moment. As we speak, we’re capping at about 1.2 million barrels and that is because of the challenges we’re having, especially with security challenges in the Niger Delta.
“But of course, that doesn’t mean that we are stopping at that because we’re working hard to ramp up production. As you’re aware, we have this year about 1.7 million bpd.
“So we still have a lot to be able to put together to do that and trust me, we’re putting in place every machinery that we can to ensure that we max out on production. We’re looking at between now and November to be able to do that” Aduda stated.
