In the latest report released by Organisation of Petroleum Exporting Countries(OPEC). Libya has overtaken Nigeria as the largest oil producing country in Africa. This report is also stated to be based on official reports gotten from the individual countries.
According to the April 2024 Monthly Oil Market Report (MOMR) published by the oil cartel, Libya recorded 1.24 million barrels per day (bpd) of crude production in March, a 5.7 increase from 1.17 million bpd in February. Nigeria recorded an output of 1.23 bpd in March to 1.32 million bpd in February. The April output figure represented the lowest production rate the nation has recorded since July 2023.
What does this mean for Nigeria?
Nigeria as a global economy has experienced ‘shakings’ like this in its oil exploration and production in the past. This decline points a lot to the state of affairs in the nation.
However, it is important to note that fluctuations in oil production are pretty much normal and relative in every oil producing country as it is now in Nigeria. Many countries experience decline and increase in oil production based on different situations affecting the country. Nonetheless, it is still paramount that the country is able to maintain a stable economy for the wellbeing of the people.
Causes of Decline in Oil Exploration
Based on recent observations of Nigeria’s oil economy, the decline in its oil production can be mostly attributed to oil theft and vandalism. Nigeria has had a lot of cases of oil theft and recovery of stolen oil by its governmental authorities. These thefts and vandalisms are a major contributor to the decline in oil production since the stolen crude cannot be accounted for.
Corruption in the oil sector is another huge threat to oil production in Nigeria. Corruption in oil production has a deep-seated root in the helm of affairs with the people supposedly in charge of accounting for our oil neglecting the general well-being of the nation for personal gains. Oil theft is also an offshoot of this deep seated corruption in the oil sector.
Illegal mining of oil serves as another contributing factor to Nigeria not able to maximize its enormous wealth of oil.
Aside from these negative contributors to the oil production of Nigeria, the insufficiency of oil producers in the country is another factor to be considered. Nigeria has a large well of oil underneath the ground that cannot be harnessed except there are more hands working the mines.
The Minister of Petroleum Resources, Heineken Lokpobiri had earlier mentioned that only five out of 60 licenses issued during the 2021 marginal oil field bid round are currently in use. A very distressing ratio if Nigeria is to experience a significant boost in her oil production and thus need to be looked into. Nobody should be allowed to hold licenses without use and as such unused licenses should be revoked.
Despite these observations, I am still of the opinion that the current position of the Nigeria oil economy is not a huge cause for alarm. As mentioned earlier, these fluctuations are pretty much normal but regardless should be adequately considered and checked to prevent further disruptions. Nigeria oil has been thriving recently and still has enough leverage for a boom.
First on the list of consideration for the Nigerian oil is the closure of the acquisition of Mobil Producing Nigeria Unlimited from ExxonMobil by indigenous energy company, Seplat Energy, which according to reports is still underway. The finalization of this acquisition is bound to bring a significant boost to the oil producing sector of the economy, as the asset is estimated to produce about 600,000 barrels per day.
Also, The Nigerian National Petroleum Company Limited (NNPCL) and its Joint Venture (JV) partner in OML 85, First Exploration and Petroleum Development Company Limited (First E&P), have commenced oil production from the asset also known as Madu Field.
Production from the field, which is located in shallow waters offshore in Bayelsa State and operated by First E&P, is expected to be at an average of 20,000 barrels per day. Another significant milestone in that will contribute to the larger goal of meeting the production required to drive revenue growth and boost the nation’s economy.
In summary of all earlier noted, the need to drive the national economy and boost production in the oil sector should be followed by a huge commitment in ensuring that the wellbeing of Nigerians are first considered. Increased oil production will not only boost export but will also be an added advantage to our local refineries with emphasis on the availability of crude oil for the refineries.
