• Thursday, July 18, 2024
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BusinessDay

Nigeria’s oil GDP hits lowest since 2015

FG prioritises production bonus as investors bid for oil blocks

Despite oil prices trading at an average of $101 per barrel, the decline in oil production in 2022 exposed the fragile state of Nigeria’s oil sector, as real growth of the country’s oil GDP stood at -19.22 percent at the end of the year.

Data gleaned from the National Bureau of Statistics (NBS) showed that the 2022 oil GDP is the lowest since 2015.

“The real growth of the oil sector was –13.38 percent (year-on-year) in the fourth quarter of 2022, indicating a decrease of 5.33 percent points relative to the rate recorded in the corresponding quarter of 2021,” NBS said in its latest quarterly report.

According to the NBS, the oil sector contributed 4.34 percent to the total real GDP in the fourth quarter of 2022, down from the figures recorded in the corresponding period of 2021 and the preceding quarter, where it contributed 5.19 percent and 5.66 percent respectively. The total annual contribution of oil to aggregate GDP in the year was 5.67 percent.

The nation in 2022 recorded an average daily oil production of 1.14 million barrels per day (mbpd), the lowest since 1999, according to available records on the Organization of Petroleum Exporting Countries (OPEC) website.

Read also: In revolt against the norm, Nigeria plans a carbon tax system

This development reflects the sorry state of Nigeria’s oil industry and the government’s inability to use the sector as an engine to create new jobs and improve the social and living standards of its over 200 million population, as other petrol-dollar economies have done.

According to experts, Nigeria’s 2022 oil GDP reflects the country’s inability to attract investments for active exploration, as well as persistent operational issues that stymie oil production growth in Africa’s largest oil-producing country.

“I think we can attribute the oil GDP, price, and levels of production to one boat. The issues of oil theft or lack of accountability in 2022 were high,” said Jide Pratt, chief operating officer of Aiona and country manager of Trade Grid.

He said that even as production moves on a positive path in 2023, Nigeria has to take holistic actions to improve and build on the momentum.

According to the Nigerian Upstream Petroleum Regulatory Commission’s oil production status report, Nigeria produced less than one million barrels per day in August and September.

According to Ayodele Oni, an energy lawyer and partner at Bloomfield Law Practice, divestment, increased security in the country, the presence of illegal modular refineries for refining illegally obtained crude oil products, and a lack of regulatory certainty, among other things, have hampered the government’s efforts to significantly improve things.

The decline in oil output during the third quarter of this year was due to rampant sabotage of oil and gas resources, production shut-ins, and investors unwilling to commit resources to new projects while increasing pollution in the region.

In October, Mele Kyari, group chief executive officer of NNPC, stated that while oil theft has been occurring in Nigeria for over 22 years, the rate at which it has recently increased is unprecedented