Nigeria’s crude oil revenue suffered a huge setback in July as the country’s oil production plunged by over four million barrels in the same month, according to the latest data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The data showed that Nigeria’s total oil production in June was 37.5 million barrels, but it dropped to 33.5 million barrels in July, indicating a loss of about four million barrels of oil.
Based on the average cost of Brent, the global benchmark for crude oil, which was $80.1/barrel in July 2023, according to the World Bank, Nigeria lost about 320.4m in the review month. Using the average exchange rate of the naira to the dollar in July, which was N777.3/, Nigeria’s loss amounted to about N249bn.
On a daily basis, Nigeria’s oil output also declined from 1.25 million barrels per day (mbpd) in June to 1.08mbpd in July, as shown by the NUPRC data. The country had produced 1.18mbpd in May, which was higher than the 0.99mbpd recorded in April.
The main factors responsible for the fall in oil production are pipeline vandalism and crude oil theft, which have been rampant in the country’s oil rich Niger Delta region. These activities have caused significant damage to the oil infrastructure and environment, as well as revenue losses for the country, international oil companies operating in Nigeria, and indigenous operators in the industry.
Nigeria’s oil production had been on an upward trend since September 2022, following concerted efforts by the Federal Government and stakeholders to curb oil theft in the sector. The country recorded its lowest oil production volume of 0.94mbpd in September 2022, but it increased to 1mbpd in October 2022, 1.185mbpd in November 2022, and 1.253mbpd in December 2022.
The momentum continued in January 2023 and February 2023, with outputs of 1.258mbpd and 1.31mbpd respectively. However, the trend reversed in March 2023, when the country’s oil production dropped by 38,102 barrels per day to 1.27mbpd, marking the first decline in seven months. The situation worsened in April 2023, when the output plummeted by 269,600 barrels per day to 0.998mbpd.
The country’s oil production recovered slightly in May 2023 and June 2023, with outputs of 1.18mbpd and 1.25mbpd respectively, but it crashed again in July 2023 to 1.08mbpd.
The drop in oil output is a major concern for the Nigerian economy, as oil is the country’s main source of revenue. The government has been working to address the problem of oil theft, but it has been a difficult task.
In the meantime, the loss of oil revenue is likely to have a negative impact on the Nigerian economy. The government may be forced to cut spending or raise taxes, which could lead to higher inflation and economic hardship for ordinary Nigerians.
The drop in oil output is also a blow to the country’s hopes of achieving economic diversification. Nigeria has been trying to reduce its reliance on oil, but the latest setback makes this goal even more difficult.
The government needs to take urgent action to address the problem of oil theft and vandalism. If it does not, the Nigerian economy could suffer even more serious damage.
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