Nigeria’s crude oil output dropped to 1.29 million barrels per day (bpd) in July, data from the country’s oil regulator show, indicating a failure to cash in on rising global prices amid the urgent need for foreign exchange.
The data released by the Nigerian Upstream Petroleum Regulatory Commission show that oil production fell 12.56 percent from 1.48 million bpd in June this year and by 1.52 percent from 1.31 million bpd on a year-on-year basis.
On average, crude oil production for the month was 1.08 million bpd, while blended and unblended condensates were 38,258 and 174,509 bpd respectively.
A major cause of the decline was the temporary shutting of the Forcados terminal last month. According to the report, production dropped by 58.4 percent to 3.29 million bpd from 7.9 million bpd in June.
Brent crude, the international oil benchmark, increased from $74.51 per barrel to $89.31 per barrel in July.
“We are back to our conundrum. We must drive a sustainable strategy in our oil and gas sector to take the wins,” said Jide Pratt, chief operating officer of Aiona and country manager of Trade Grid.
He said Nigeria must ensure zero loss of oil through theft and inefficiencies now as prices remain high.
“We must hold oil rigs to higher standards of tracking and measuring what is actually produced. No waste at this time,” he said.
On how to boost revenue, Pratt said Nigeria must also encourage short, medium and long-term incentives to attract and retain more investment in its off and onshore rigs.
“The need to hit 2 million bpd at least is pertinent for more revenue alongside feeding local refineries. Then and only then can we begin to think of open quota and its attendant implications,” he said.
Shell Petroleum Development Company (SPDC) suspended loadings of Nigeria’s Forcados crude oil due to a potential leak at the export terminal in July.
“We can confirm that injections into the Forcados Oil Terminal were curtailed on Wednesday, July 12, 2023, following the report of some sheen in the mooring vicinity,” SPDC said.
With this development, Escravos oil terminal had the highest crude oil output in July 2023 among the seven major crude terminals in the country with 4.87 million bpd.
Olufola Wusu, energy lawyer and partner in the law firm Megathos, said that several factors are responsible for the decline in Nigeria’s oil and gas extraction, which also reduces the amount of associated gas available to stakeholders like liquefied natural gas (LNG) companies that purify, liquefy and ship LNG for export earning the much-needed foreign exchange.
He said to ramp up oil and gas production, there is a need for regulatory certainty, a clear and visible implementation of the Petroleum Industry Act and other oil and gas regulations that will reassure investors, as investors need to be sure of what the rules are before putting in their investments.
He said: “There is a glaring need to address the issue of asset insecurity, in the form of attacks on pipeline and other critical assets that is not only hampering production but is also encouraging the rapid migration from onshore fields to offshore fields, (remarkably the offshore fields have been largely prolific, nearly to the point of covering up the shortfall from the onshore fields).
“Industry stakeholders need clear assurance to drill new wells to shore up reserves, followed by regular and transparent allocation of oil and gas blocks to capable local and foreign investors.”
According to Wusu, regulatory certainty, political stability, political will and viable commercial opportunities will make it easier for investors to attract viable financing in record time, citing the speed with which Germany built and linked up its first floating LNG terminal to replace Russian gas.