Nigeria Strives To Boost Crude Oil Production Amid Ongoing Struggles — Investigation

Nigeria’s efforts to increase crude oil production are facing significant hurdles. In the first 10 months of 2024, the country’s Condensate output, a light premium crude crucial to its oil basket, stagnated at 211,401 barrels per day (bpd), reflecting an 11.6% drop compared to 238,489 bpd in….READ MORE…

the same period of 2023.

Meanwhile, Nigeria’s total crude oil output declined by 3.9%, averaging 1.177 million bpd in 2024, down from 1.224 million bpd in 2023. Condensate is vital for Nigeria and other OPEC members, as it is not included in the country’s production quota but fetches prices close to Nigeria’s Bonny Light. A reduction in Condensate output negatively affects the nation’s oil revenue, which is central to its economy.

Budget Impact and Production Targets: Nigeria’s 2024 budget was based on a production target of 1.7 million bpd, including Condensate, at $77 per barrel. While the shortfall in output may not significantly impact the country’s revenue, experts highlight that higher global oil prices have helped offset the decline.

Recent figures from the Nigerian National Petroleum Company Limited (NNPCL), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Minister of State for Petroleum, Senator Heineken Lokpobiri, show that Nigeria’s peak output has reached 1.8 million bpd. However, OPEC’s estimate, excluding Condensate, pegs Nigeria’s output at 1.4 million bpd.

A month-by-month breakdown reveals a decline in Condensate output, which dropped by 6.9% to 204,806 bpd in October 2024, compared to 219,997 bpd in September. This was also a 3.2% decrease from 211,499 bpd in October 2023.

Challenges Among Major Producers: Major oil companies in Nigeria, such as Shell, ExxonMobil, Agip, Chevron, and Total, have also reported declines in output this year. For example, ExxonMobil’s Condensate output rose by 23% to 23,269 bpd in October 2024 but was down significantly from 45,000 bpd in January. Shell’s output from its Bonny terminal fell to 494,915 bpd in October, while its Forcados terminal saw a 39% drop in output.

Impact of Energy Transition: Experts suggest that the global push for energy transition is slowing investments in oil and gas projects. Austin Avuru, Vice Chairman of Platform Petroleum Limited, emphasized that increasing Condensate production requires greater investment in oil and gas extraction. He added that while Nigeria’s Condensate output is essential, it cannot be significantly increased without more investment in the broader oil and gas sector, despite the challenges posed by the energy transition.

Another industry expert pointed out that funding for oil and gas projects has been sluggish due to the political pressures surrounding the global energy transition, which aims for a 2050 target. He noted that African nations, including Nigeria, need more time to implement energy transition plans that incorporate natural gas as a transition fuel.

Regulatory Efforts to Boost Output: The NUPRC is working with other stakeholders to boost investment and oil output. Engr. Gbenga Komolafe, NUPRC’s Chief Executive, stated that the commission has made strides over the past three years, despite the challenges posed by global energy transition pressures and the defunding of fossil fuels. He highlighted the successful introduction of regulations under the Petroleum Industry Act (PIA), which have improved transparency and boosted investor confidence.

Komolafe added that significant progress has been made in increasing Nigeria’s oil and gas reserves to 37.5 billion barrels of oil and 209.26 trillion cubic feet of gas. Ongoing activities, such as the development of marginal fields and licensing rounds, are expected to further boost Nigeria’s oil production in the near future, with projections for an additional 60,000 bpd from new assets.

Future Outlook: Analysts remain optimistic about Nigeria’s future oil production. Mazi Colman Obasi, National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), noted that with over 37 billion barrels of crude oil reserves, Nigeria has the potential to significantly increase its Condensate output. However, he stressed that more investment is needed to unlock the full potential of the nation’s crude, Condensate, and natural gas resources.