Nigeria’s oil production has fallen by 30 per cent in the last four years to 1.423 million barrels per day, mb/d in 2020 from 2.041 million barrels per day, mb/d in 2017.
This is according to a recent investigative study by the Organization of Petroleum Exporting Countries OPEC, which includes pipeline vandalism and oil theft in the Niger-Delta.
The figure excludes 2020 condensate production, according to the data obtained by Vanguard Energy from OPEC’s monthly market reports between 2017 and 2020.
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The nation’s output declined by 19.3 per cent to 1.648 mb/d in 2018 from 2.041 mb/d in 2017 Year-on-year, YoY.
The production level, however, rose by 6.6 per cent to 1.765 mb/d in 2019 from 2018 figure before declining again by 19 per cent to 1.423 mb/d in 2020.
THE IMPACT
The gradual drop in output is a serious threat to the Economy of Nigeria, especially as the world continues to adopt new forms of clean energy.
However, an investigation by Energy Vanguard showed that the impact could have been more severe on the nation’s economy, if not for its huge condensate production and export, estimated at between 300,000-400,000 barrels per day, bpd.
For instance, although Nigeria produced 2.041.6 mb/d for the implementation of its 18,203,616,144.00 USD budget in 2017, it was possible to realize its 2.2 mb/d target at $44.5 per barrel.
According to PKMG Limited, “Oil price was projected at $44.5/barrel but closed at $66.73/barrel by the end of December 2017, due to the increase in oil price, a proportional increase in revenue was expected.
“However, the estimated oil revenue was curtailed by an average actual oil production of 1.515 mb/d, instead of the anticipated 2.2 mb/d.
“Moreover, the increase in production occurred at the tail end of the year, thereby ensuring an average shortfall in expected revenue.
However, the impact of the condensate was also felt in the process of implementing the 2019 and 2020 budgets.
GROSS DOMESTIC PRODUCT
According to the African Development Bank, AfDB, the limited output and relatively low crude prices have impacted negatively on the nation’s Gross Domestic Product, GDP, the final value of the goods and services produced within a country during a specified period of time, normally a year.
In its latest Nigeria Economic Outlook, obtained by Energy Vanguard, AfDB states that the Nigeria’s economy entered a recession in 2020, reversing three years of recovery, due to fall in crude oil prices on account of falling global demand and containment measures to fight the spread of Covid-19.
“The containment measures mainly affected aviation, tourism, hospitality, restaurants, manufacturing and trade. Contraction in these sectors offset the demand-driven expansion in financial, information and communications technology sectors.
“Overall real GDP is estimated by AfDB to have shrunk by 3 per cent in 2020, although mitigating measures in the Economic Sustainability Programme, ESP, prevented the decline from being much worse. It reads.
INVESTMENT
Apparently, responding to these and other fears, the government has indicated interest to expand investment through the instrumentality of the National Oil and Gas Excellence Centre, NOGEC, and utilize petroleum revenues, as a major instrument in diversifying the nation’s oil-dependent economy.
Speaking at the recent commissioning of the Centre in Lagos, President Muhammadu Buhari said that his government was so committed to uplift the Nigeria’s Oil and Gas Industry.
“At the beginning of my administration, we set a clear roadmap for the oil and gas sector in order to deepen value from the nation’s huge resource potentials and create opportunities for investors, both local and foreign, when I declared that: ‘Nigeria is open for business.
“I am delighted that, since then, we have witnessed major final investment decisions in the sector such as the AKK Pipeline project, the NLNG Train-7 project, and the completion of the 5,000bpd Waltersmith Modular refinery.
Buhari added that his government will use the oil and gas industry as a pivot, to diversify economy so as to grow revenue and GDP as well as, generate employment and eliminate poverty.