• Tuesday, July 23, 2024
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BusinessDay

Oil sector contracts 11% as oil production hits lowest since 2014

Oil sector contracts 11% as oil production hits lowest since 2014

Despite oil prices trading at over $100 per barrel, 60 percent higher than a year earlier, the latest data from the National Bureau of Statistics (NBS) has exposed the fragile state of Nigeria’s oil sector as the real growth of the country’s oil GDP stood at -11.77 percent compared to 8.89 percent in 2020

“Oil sector growth of -11.77percent increased by 14.27 percent points when compared to Q1 2022 which was –26.04percent. Quarter-on-Quarter, the oil sector recorded a growth rate of -4.97percent in Q2 2022,” NBS said in its latest quarterly report.

According to the NBS’ report, the oil sector contributed 6.33 percent to the total real GDP in Q2 2022, down from the figures recorded in the corresponding period of 2021 and the preceding quarter, where it contributed 7.42percent and 6.63percent respectively.

The nation in the second quarter of 2022 recorded an average daily oil production of 1.43 million barrels per day (mbpd), lower than the daily average production of 1.61mbpd recorded in the same quarter of 2021 by 0.18 mbpd and lower than the first quarter 2022 production volume of 1.49 mbpd by 0.06mbpd.

The story of how Nigeria’s sprawling oil industry – which once accounted for the highest foreign direct investments, which was the prime career choice for many bright children and the lubricant that oiled both infrastructure and sleaze – drifted to the edge of the cliff mirrors how Africa’s biggest economy suffered a bruising fall.

Read also: FG to borrow N11.3trn as 2023 budget deficit jumps

“Nigeria seems stuck with perennial issues while other companies are acting proactively to recent market development,” said Kelvin Atafiri who runs Cavazanni Human Capital Limited, an investment firm exposed to the oil and gas sector.

Findings by BusinessDay showed while Nigeria’s oil GDP is struggling other countries are reaping tens of billions of dollars due to a major surge in prices fueled by the conflict in Eastern Europe and a months-long Western sanctions spree on Russia, a major global exporter.

Norway, a country with similar oil production to Nigeria, posted nearly $6.8 billion in net oil profit between April and June, up from $1.9 billion in the same period of 2021.

Also, rampant sabotage of oil and gas resources is taking a toll on Nigeria’s oil and gas sector with investors unwilling to commit resources to new projects while increasing pollution in the region.

The Nigerian National Petroleum Corporation Ltd (NNPC) said as much as 200,000 barrels of oil per day was stolen in 2021, with the operation now assuming industrial-scale theft.

In response, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has proposed declaring a state of emergency in the country’s oil and gas sector, the lifeblood of Africa’s biggest economy.

“The imperative is on Nigeria to declare some sort of emergency in its oil and gas sector,” Gbenga Kofomolafe, commission chief executive of the Nigerian Upstream Regulatory Commission (NUPRC), said at the Association of Nigerian Energy Correspondents’ conference in Lagos on Thursday.