The outlook for Nigeria’s oil production, including condensate, remains bleak, with industry data forecasting an output of only 1.4 million barrels per day (mbpd) for the second half of 2024. This figure falls significantly short of both the 1.8 mbpd quota set by the Organisation of Petroleum Exporting Countries (OPEC) and the 1.7 mbpd benchmark included in Nigeria’s 2024 budget.
According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s oil output, excluding condensate, dropped by 2.3% to 1.25 mbpd in June 2024, down from 1.28 mbpd in April 2024. The downward trend has persisted since January 2024, when production was at 1.6 mbpd, gradually falling through the first half of the year.
OPEC's May 2024 data corroborates this decline, showing Nigeria’s oil output remaining flat at 1.2 mbpd for both April and May 2024. When secondary sources are considered, OPEC estimates Nigeria’s oil output at 1.4 mbpd in May 2024, excluding condensate.
The ongoing reduction in oil exploration and production, largely due to limited investment, is evident in the decline of the nation's rig count. OPEC's June 2024 Monthly Oil Market Report noted a 15.8% month-on-month decrease in May 2024, with the rig count falling to 16 from 19 in April 2024.
Dr. Bala Zakka, an energy expert, highlighted the grim outlook for Nigeria’s oil production, attributing it to the falling rig count and other operational challenges. An anonymous energy analyst also expressed doubts about Nigeria meeting its output targets for the rest of the year, which could negatively impact the budget.
NJ Ayuk, Executive Chairman of the African Energy Chamber, emphasized the need for Nigeria to minimize oil theft and avoid pipeline vandalism to stabilize production. Ayuk warned that failure to address these issues could lead to a terminal decline similar to Angola’s.
Wumi Iledare, Professor Emeritus in Petroleum Economics, believes Nigeria has the potential to increase oil output, citing the country’s 37 billion barrels of reserves. He stressed the importance of proper implementation of the Petroleum Industry Act (PIA) 2021, transparency, and good governance.
Dr. Olisa Agbakoba, a senior lawyer and human rights activist, called for a transformational oil and gas policy driven by an active Minister of Energy rather than the President. He advocated for transitioning International Oil Companies (IOCs) to service providers rather than partners, aligning with constitutional provisions that grant Nigerians sovereignty over natural resources.
Mallam Mele Kyari, Group CEO of NNPC Limited, stated that Nigeria’s current assets could support a production capacity of two million bpd. He acknowledged past challenges such as oil theft and divestments but remained optimistic about future output.
Engr. Gbenga Komolafe, Chief Executive of the NUPRC, highlighted recent asset divestments, such as the NAOC-Oando deal, as steps towards boosting oil and gas production. He also noted significant investment opportunities in Nigeria’s deep-water sector, which accounts for a substantial portion of the country’s oil reserves and daily production.
The upcoming 2024 Licensing Round, with 31 blocks available for bidding, is expected to attract further investment and enhance Nigeria’s oil and gas assets, potentially improving output in the coming years.
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