Emmanuel Addeh in Abuja
Despite the numerous challenges besetting the Nigerian oil sector, the country produced over 2.86 billion barrels of crude and condensate within a period of five years, a THISDAY analysis of available data spanning 2020 to 2024 has shown.
The data sourced from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicated that during the period under consideration, there were fluctuations in the quantity of the commodity pumped, brought about by both local and international oil industry dynamics.
The review showed that 2020 saw the highest crude oil output within the period, hitting a volume of 670.8 million barrels of oil, as Nigeria continued to enjoy the yields from previous investments in the sector.
in 2021, the country’s production fell to 590.7 million barrels of crude in the aftermath of a directive by the Organisation of Petroleum Exporting Countries (OPEC) to members to drastically cut down on oil production as demand shrank after the COVID 19 pandemic.
For years, the upstream sector of Nigeria’s oil industry, which includes exploration, drilling, and production of crude oil and natural gas, has faced numerous challenges that hinder its efficiency and growth.
Nigeria loses significant revenue due to crude oil theft and pipeline vandalism, with militants and criminal syndicates sabotaging pipelines and causing operational disruptions. The government and oil companies have struggled to secure critical oil infrastructure, but with limited success.
Besides, aging infrastructure and operational inefficiencies remain a key problem, as many oil facilities, pipelines, and rigs are outdated, leading to frequent breakdowns and production losses. In addition, insufficient maintenance results in environmental hazards and reduced output.
In addition, industry players complained of frequent policy changes which create uncertainty for investors, especially before the passing into law of the Petroleum Industry Act (PIA) of 2021, which aims to reform the sector.
Although the NUPRC has recently moved to ensure the regulatory environment in Nigeria meets with global best practices, a lot of work still needs to be done to remove bureaucratic inefficiencies that discourage foreign investments.
The global push for cleaner energy has further compounded the problems of the sector, threatening Nigeria’s oil market and slowing down foreign investment in the sector.
But aside from pumping 670.8 million barrels in 2020 and 570.7 million in 2021, Nigeria’s crude oil production witnessed a sharp decline in 2022, falling to as low as 502.4 million barrels in that year.
However, as crude oil production began to slump, Nigeria’s economy was saved significantly by rising crude oil prices, which helped to raise government revenue during the period.
During the period, further checks revealed that in 2020, the year began with Brent crude oil, Nigeria’s benchmark, priced at $63.65 per barrel in January. However, the onset of the COVID-19 pandemic and a price war led to a sharp decline, with prices falling drastically to $18.38 per barrel in April. By December, prices recovered to $49.99 per barrel.
In 2021, historical data showed economic recovery, with the average price for the year being $70.86 per barrel.
But in 2022, geopolitical tensions, notably the Russia-Ukraine conflict, disrupted global oil supplies, pushing prices higher. Brent crude prices peaked between $100.45 and $122.71 per barrel from March to August. By December, prices stabilised at $80.92 per barrel.
In 2023, the average Brent crude oil price was $82 per barrel, while in 2024, prices remained relatively stable, averaging $81 per barrel and monthly prices fluctuating between $70 and $90 per barrel.
Still, after Nigeria’s sloppy oil production figures in 2022, the country began to pick up, pumping 536 million barrels of oil and condensate in 2023 and in 2024 this rose by about 6 per cent, according to a THISDAY estimate, to hit 566.3 million last year.
