Real growth in the oil sector was recorded at 5.40 percent in the second quarter (Q2) of 2014 (-5.22 percent quarter-on-quarter), indicating better performance compared to -16.42 percent growth recorded in Q2 of 2013, according to data released by the National Bureau of Statistics (NBS) this month.
Nigeria, Africa’s top oil producer and exporter, pumped an average of 2.21 million barrels per day (bpd) in the three months to June, up from 2.11 million bpd a year earlier, due to an increase in production.
Nigeria recently rebased its Gross Domestic Product (GDP), resulting in an 89 percent increase in the estimated size of the economy and the emergence of the country has the largest economy in Africa with an estimated nominal GDP of $510 billion, surpassing South Africa’s $352 billion.
Nigeria has maintained its impressive growth over the past decade with a record estimated 7.4 percent growth of real GDP in 2013, up from 6.7 percent in 2012, according to African Development Bank Group in its African Economic Outlook 2014 report.
It said the performance of the economy continued to be underpinned by favourable improvements in GDP growth of 5.4 percent, 8.3 percent and 7.8 percent in 2011, 2012 and 2013, respectively.
Agriculture – particularly crop production – trade and services continue to be the main drivers of non-oil sector growth. The oil sector growth performance was not as impressive with 3.4 percent, -2.3 percent and 5.3 percent estimated growth rates in 2011, 2012 and 2013, correspondingly.
“Growth of the oil sector was hampered throughout 2013 by supply disruptions arising from oil theft and pipeline vandalism, and by weak investment in upstream activities with no new oil finds,” said Barbara Barungi, author of the report.
He noted that negative growth of the oil sector may also continue to drag down overall growth until a lasting solution is found to the challenge of oil theft and weak investment in exploration due to the uncertain state of play in the sector as a result of non-passage of the Petroleum Industry Bill (PIB).
It is in this light that the recent real growth seen in the oil sector in the Q2 2014 looks unlikely to be sustainable given the foregoing unresolved challenge.