Nigeria Records Highest Quarterly Oil Output in Three-years Despite Production Decline in Q1, 2024

Emmanuel Addeh in Abuja

In spite of Nigeria’s overall oil production decline in Q1, 2024 compared to the preceding months, the country recorded the highest quarter-on-quarter volume between January and March this year.

When oil output in the last two years is put side by side this year’s, a THISDAY analysis of available data showed that production in the last three months still exceeded the same period in 2022 and 2023 respectively.

A computation of production figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicated that whereas the country drilled a total of 116.9 million barrels in Q1, 2022, the volume was 114.7 million in Q1, 2023, while it rose to 120.7 million barrels in Q1, 2024.

This marked about 6 million production growth in Q1, 2024 compared to the same period in 2023.

At the weekend the NUPRC confirmed earlier data from the Organisation of Petroleum Exporting Countries (OPEC), which showed a dip in Nigeria’s oil production for the second consecutive month this year.

Information on crude drilling operations for March from the NUPRC indicated that production fell from 1.42 million barrels per day in January to 1.32 million bpd in February, before slipping to 1.23 million bpd in March.

It indicated that cumulatively, Nigeria may have lost as much as 2.8 million barrels in the entire month of March, that is roughly 90,000 bpd during the period under review.

The Minister of State, Petroleum Resources (Oil), Senator Heineken Lokpobiri, last Friday acknowledged the country’s declining crude oil production after an initial rise in recent months.

In a statement by his Special Adviser on Media and Communications, Nneamaka Okafor, the minister assured that measures were being taken to address the situation, not only to restore production to previous levels, but to increase it in a sustainable manner.

 Lokpobiri stated that the slump was primarily due to issues encountered on the Trans Niger Pipeline (TNP), coupled with maintenance activities carried out by some oil companies operating in Nigeria during the period.

Those reasons aside, oil theft and waning investments remain Nigeria’s biggest constraints to achieving its OPEC quota, which was reviewed down from over 1.7 million bpd in 2023 to 1.5 million bpd for 2024. At the time, OPEC cited the country’s inability to consistently meet its allocated production targets for the decision.

The NUPRC data showed that between January and March 2022, Nigeria produced approximately 43.3 million barrels, 35.2 million barrels and 38.3 million barrels respectively.

In 2023, its output for the first three months were 39.2 million barrels, 36.1 million barrels and 39.2 million.

However, in the first three months of 2024, despite production decline compared to previous months, Nigeria pumped 44.2 million barrels, 38.3 million barrels and 38.1 million barrels in each of January, February and March.

There are already concerns that the federal government’s 2024 budget, which is benchmarked against a crude oil output of 1.78 million barrels per day and an oil price of $77.96 may be negatively impacted by the recent development.

Nigeria depends on oil export for over 80 per cent of its foreign exchange earnings, which it desperately needs to boost its struggling economy in the short term.

A review of the oil production assets which were the most problematic during the period showed that Bonny terminal recorded a steady decline in 2024, falling from 6.36 million barrels in January to 4.60 million barrels and 4.26 million barrels in February and March respectively.

Brass also recorded a decline from 735,680 barrels in January to 617,189 barrels in February and then 686, 188 barrels in March.

Production at Forcados also fell from 7.79 million barrels in January to 6.79 million barrels in February and further to 6.67 million barrels in March 2024.

Recently, Nigeria’s foreign exchange reserves have taken a significant hit, dropping by approximately $1.02 billion within the last few days as the Central Bank of Nigeria (CBN) stepped up efforts aimed at defending the naira.

On March 18, 2024, the FX reserves stood at $34.45 billion, but by April 3, it had dropped to $33.50 billion, based on data from the apex bank.

Ii is believed that if Nigeria was producing enough crude oil, the significant drawdown of the reserves, would have been avoided.

Before now, despite recent gains in terms of volume of oil produced by Nigeria, some Nigerians believe that there is need to set new targets for the local security groups in charge of pipeline surveillance in the Niger.

This is because production has not markedly risen as expected since the contacts were awarded to them, in spite of the huge contract payments.

Just last week, the Nigerian National Petroleum Company Limited (NNPC) in its weekly rundown of activities between March 30 and April 5, 2024, said a total of 155 oil theft-related and vandalism incidents were recorded across several locations in the Niger Delta region from several sources.

However, according to the NNPC, five persons were arrested by one of the local security teams, with 53 illegal connections uncovered between March 30 and April 5, 2024 in Bayelsa, Rivers and Delta States.