Nigeria has faced a significant financial setback, losing approximately N636.3 billion in revenue due to a consistent decline in oil production since January 2024.
Data from a Federal Government agency shows that Nigeria's crude oil production (excluding condensates) dropped from 1.43 million barrels per day (mbpd) in January to 1.25 mbpd in May. This represents a reduction from 44.22 million barrels produced in January to 38.8 million barrels in May, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The average price of Brent crude, the global benchmark, was $80.12 per barrel in January, rising slightly to $81.75 in May. Concurrently, the naira's exchange rate against the dollar averaged 1,434.1/$ in May, highlighting the currency's struggle since the Central Bank of Nigeria's foreign exchange market harmonization on June 14, 2023.
The combined factors of decreased oil production, Brent crude prices, and exchange rate fluctuations led to Nigeria's estimated revenue loss of N636.3 billion between January and May 2024.
Nigeria's oil production has fluctuated monthly, with 1.43 mbpd in January, dropping to 1.32 mbpd in February, 1.23 mbpd in March, rising slightly to 1.28 mbpd in April, and falling again to 1.25 mbpd in May. This decline is primarily attributed to frequent oil pipeline vandalism and crude oil theft.
Efforts by the government to mitigate these issues have not yielded the desired results. On June 13, 2024, the Nigerian National Petroleum Company Limited (NNPC) called for the judiciary to establish special courts to prosecute those involved in oil theft and pipeline vandalism. NNPC's Group Chief Executive Officer, Mele Kyari, emphasized this need at the National Judges Capacity Building Workshop on the Petroleum Industry Act 2021 in Abuja.
Kyari urged the judiciary to expedite hearings on such offenses and support efforts to tackle crude oil theft and pipeline vandalism, which are crucial for the oil and gas industry’s potential as a key driver of national economic growth.
Major oil companies have expressed concerns over the impact of theft and vandalism on crude supply for local refineries. Dr. Chinyere Almona, Director-General of the Lagos State Chamber of Commerce and Industry, cited these issues as barriers preventing oil companies from meeting their quotas and supplying crude to refineries like the Dangote Petroleum Refinery.
As Nigeria continues to grapple with these challenges, the government and industry stakeholders are under pressure to find effective solutions to safeguard the nation's vital oil revenue stream.
