• Wednesday, April 24, 2024
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Nigeria’s oil revenue at risk as output hits 6-month low

Nigeria’s oil revenue at risk as output hits 6-month low

Nigeria’s oil revenue is under threat after crude oil production plummeted to 1.32 million barrels per day (mbpd) in February, according to latest data from the Organisation of the Petroleum Exporting Countries (OPEC).

This reduction in output marks a setback for Africa’s largest oil producer, impacting both its economy and global oil markets.

According to OPEC’s latest monthly report released on Tuesday, Nigeria’s February crude production fell to 1.32mbpd compared to its January output, which stood at 1.46 mbpd.

Read also: Nigeria oil production faces OPEC cut hurdle

The decrease of approximately 140,000 barrels per day highlights challenges faced by the Nigerian oil industry, including infrastructure constraints, security issues in oil-producing regions, and operational disruptions.

Nigeria, a key member of OPEC, has been grappling with various factors affecting its oil sector, including pipeline vandalism, oil theft, and regulatory uncertainties.

These issues have not only hampered production levels but have also hindered the country’s efforts to fully harness its oil resources for economic growth and development.

Mele Kyari, group chief executive officer of the Nigerian National Petroleum Company Limited (NNPCL) has announced the company’s effort in tackling cases of oil theft in the country, stating that 6,409 illegal refineries had been deactivated in the Niger Delta region of the country.

“We have deactivated 6,409 illegal refineries in the Niger Delta region. Today, we have disconnected up to 4,846 illegal pipes connected to our pipelines, that is out of 5,543 such illegal connection points. That means there are a vast number of such connections that we have not removed.”

According to him, going by the volume of oil stolen daily and the brazenness with which the perpetrators operate, crude oil theft is the most humongous and virulent economic crime in Nigeria that must attract the attention of anti-graft agencies.

The decline in Nigeria’s crude oil output comes at a time when OPEC and its allies, including Russia, are implementing production cuts to stabilize global oil markets and support prices. The OPEC+ group, led by Saudi Arabia, has been closely monitoring production levels among its members to ensure compliance with agreed-upon quotas.

In response to the volatilty in production, Nigerian authorities have reaffirmed their commitment to addressing the underlying challenges facing the country’s oil industry. Efforts are underway to enhance security measures, invest in critical infrastructure, and implement reforms aimed at improving efficiency and transparency within the sector.

Read also: Oil industry needs $14trn investment to meet global demand – OPEC

The Nigerian government has emphasized the importance of maintaining stability in oil production to safeguard its revenue streams and contribute to the country’s economic recovery efforts.

Despite the setback in February, Nigerian officials remain optimistic about the prospects for the country’s oil sector, citing ongoing investment initiatives and potential opportunities for growth and diversification.

However, the challenges posed by fluctuating oil prices and global market dynamics continue to underscore the need for sustained reforms and strategic planning in Nigeria’s energy industry.