Nigeria's crude oil production capacity has collapsed by 83%, the results show. Data from the Organization of Petroleum Exporting Countries (OPEC) reports that its members macroeconomic statistics showed that the country's export capacity fell by almost 100% between 2020 and 2021. A breakdown of the data showed that the country's monthly production capacity was about 95.62 million barrels per month in 2012, just over 3 million barrels per day. It fell to 90,546 million barrels per month at 2.9 mb/d in 2013 and to 75,196 million in 2014 at 2.4 mb/d.
The country's oil production capacity continued to collapse to 41,168 barrels per month in 2015 and 27,295 million barrels in 2016 at 880,000 b/d, but the trend reversed and rose to 37.983 million barrels per month in the year 2017. It can be said that between 2014 and 2016 there was a global recession that adversely affected developing countries. During this period, Nigeria's crude oil production suffered a major setback due to vandalism resulting from militancy in the Niger Delta. However, in 2018 it increased to 513 million barrels at 1.7 mb/d.
The country's oil production declined further to 45,106 million barrels per month in 2019 and 27,730 million barrels per day to 894,000 per day in 2020. Production picked up again in 2021 and is held at 41,378 million barrels per month 1.3 MB/day. The country has not been able to meet its OPEC quota for a long time. Nigeria has a rate of 1.4 mb/d from OPEC in 2020, 1.5/1.6 mb/d in 2021 and 1.7 mb/d in 2022.
Until recently, when several crude oil-stealing cartels in the Niger Delta region were dismantled, Nigeria's oil exports suffered setbacks last September, when production plummeted to around 900,000 barrels a day, according to OPEC. However, last December, Bala Wunti, head of upstream investment at NNPCL Upstream Investment Management Services, said the country's dwindling oil production had bounced back to around 1.6 mb/d.
However, verification of OPEC's monthly oil market report for January 2023 showed that Nigeria's production in December was 1.2 mb/d as reported by direct sources. Meanwhile, experts have argued that Africa, including Nigeria, needs to diversify its economy away from oil and gas.
Professor of Economics and Public Policy, Akpan Ekpo, in a recent interview with The PUing, said that despite accounting for 80 per cent of the total crude oil trade, Nigeria needs to diversify as oil revenues are no longer reliable.
“Oil prices are volatile, and we need to think of other ways to boost revenue,” he said. According to Ayodele Oni, a partner at Bloomfield Law Practice, the Federal Government needs to provide solutions to the oil theft challenging the country.
“Plans need to be put in place to ensure that crude is not stolen. Our leaders need to be proactive and think outside the box. As we speak, many companies are already working on alternative structures for moving their crude export terminals. If we can sell more crude at this time when crude prices have increased in the international market, then it is good for our revenue, our balance of trade and balance of payment,” he said.
Crude oil production and prices have determined at least half of the price of each gallon of gas in the last decade or so. As production and prices change daily, gas prices are constantly fluctuating too. The rest of the pricing is based on refinery and distribution costs, corporate profits and state and federal taxes. Thus, the report that oil production has crashed in Nigeria by a whopping 83% also brings to focus the inability of end users to access fuel due to drastic increases in fuel prices. Other prices are included such as marketers and distribution problems.
The bottom line here is that oil for Nigeria is one of its most important commodities. As a result, its availability is also determined by the quality and ease of refining. Investors have the option of investing in oil futures, which gives them a certain influence over prices. The oil market is quite complex, and a better understanding of how oil gets to the public from the ground up in all its forms helps us understand its fluctuating prices. Therefore, the Nigerian LPG is also affected by this so-called oil production crash which makes it imperative that the country invests in other core areas of energy to boost the country’s economy.