Nigeria’s oil production edged higher in April 2024, offering a glimmer of hope for the nation’s economic prospects. However, this increase falls short of government targets, highlighting persistent challenges that continue to plague the oil sector.

Slight Rise in Output, Year-Over-Year Gain

Both the Organization of the Petroleum Exporting Countries (OPEC) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported a slight increase in Nigeria’s crude oil production for April 2024. Citing official sources, OPEC estimates that Nigeria produced 1.28 million barrels per day (bpd) in April, excluding condensate. This represents a modest 4% increase compared to March 2024’s figure of 1.23 million bpd. The NUPRC’s report aligns with OPEC’s findings.

Looking at the year-over-year trend, there’s a more positive outlook. April 2024’s production showed a significant 28% increase when compared to the 999,000 bpd recorded in April 2023. This suggests a potential for growth in Nigeria’s oil output.

It’s important to note a slight discrepancy in production figures. While OPEC’s primary data shows a rise, figures derived from secondary sources paint a different picture. Using this alternative data, OPEC estimates that Nigeria actually produced 1.35 million bpd in April 2024. However, this figure represents a 3.6% decrease from March 2024.

Shortfall Against Budget Target

Despite the reported increase, Nigeria’s oil production remains below the ambitious target set in the 2024 budget. The government had benchmarked oil production at 1.7 million bpd, including condensate, with an assumed oil price of $77.96 per barrel. This shortfall translates to missed revenue opportunities for the nation’s coffers.

Compounding Nigeria’s oil woes is the recent decline in global oil prices. Bonny Light, Nigeria’s benchmark crude oil, has dropped to $83.51 per barrel in the international market. This represents a decrease of $6.49 per barrel compared to March 2024’s price of $90 per barrel. The lower price per barrel, coupled with production shortfalls, puts additional strain on Nigeria’s oil revenue generation.

Government Calls for Action on Oil Theft

Nigeria’s Minister of State for Petroleum Resources, Heineken Lokpobiri, acknowledged the challenges posed by oil theft and its detrimental impact on the environment. He urged local communities to collaborate with the government in tackling these illegal activities. Lokpobiri emphasized the crucial role that oil revenue plays in the Nigerian economy, highlighting its contribution to foreign exchange earnings. He stressed that addressing oil theft is essential for maximizing the nation’s income from this vital resource.

While the slight increase in oil production offers a sliver of optimism, significant challenges remain. Curbing oil theft, pipeline vandalism, and illegal refining activities is critical for Nigeria to meet its production targets and maximize revenue from its oil resources. The government must also adapt to the volatile global oil market and explore strategies to mitigate the impact of price fluctuations. Furthermore, long-term economic diversification efforts are crucial to reduce Nigeria’s dependence on oil and ensure sustainable economic growth.

Source: Vanguard