Nigeria, Africa’s largest oil producer, is grappling with a 27 percent year-to-date drop in active oil rigs, posing a significant challenge to the federal government’s ambitious goal of reaching a daily crude oil output of 2 million barrels per day (bpd) by the end of December 2024.
Latest data from the November 2024 Monthly Oil Market Report of the Organisation of Petroleum Exporting Countries (OPEC) shows that the number of functional oil drilling rigs across the country declined to 11 in October.
OPEC data showed that the country operated an average of 17, 17 and 14 oil rigs in the first, second, and third quarters of 2024, respectively.
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An oil rig/platform is a large structure that houses facilities for extracting and processing petroleum and natural gas from rock formations beneath the seabed.
The rig count reflects the level of exploration, development, and production activities in a country’s oil and gas sector. Active oil exploration attracts investment and revenues into the country for economic growth.
“Nigeria, a previously bright spot on big oil and gas investors’ radar screens, has dimmed significantly as investor attention is increasingly drawn to new and emerging developments in Namibia, Ivory Coast, Angola, and the Republic of Congo,” NJ Ayuk, executive chairperson of the African Energy Chamber, said.
“With two-thirds or more of its revenue coming from oil, investor flight is a serious problem for Nigeria.”
The National Bureau of Statistics (NBS) revealed that the country’s foreign capital investments in the industry fell from $720 million in 2016 to $3.64 million by 2023.
According to the report, the petroleum industry received nothing from the $3.38 billion in capital imports into Nigeria during the first three months of 2024.
The federal government had set out to hit the target of 2 million bpd in December this year, a development that now looks like a tall order as the country’s rig declines.
Heineken Lokpobiri, minister of state for petroleum (oil), said: “The shortest way for us to get out of our current economic problems is to increase production.
“And our target is that by December we want to hit at least two million barrels,” Lokpobri said.
In addition, the government claimed that Nigeria is currently revving up output, producing 1.8 million bpd as of November 2024.
Mele Kyari, group chief executive officer of the Nigerian National Petroleum Company Limited (NNPC), said that the state-owned oil company and its partners have increased crude oil and gas production to 1.8 million barrels per day (mbpd) and 7.4 standard cubic feet per day (scfd) respectively.
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“The team has done a great job in driving this project of not just production recovery but also escalating production to expected levels that are in the short and long terms acceptable to our shareholders based on the mandates that we have from the President, the Honourable Minister and the Board,” Kyari explained.
Meanwhile, OPEC’s latest oil market report revealed that Nigeria’s crude oil production recorded an average of 35,000 barrels increase in crude output in October, rising to 1.434 million barrels per day (bpd).
According to the report, production rose from 1.399 million bpd in September, according to secondary data from Nigerian authorities.
Direct communication showed that Nigeria’s average crude oil production for October was 1.333 million bpd, an increase of 9,000 barrels compared to 1.324 million bpd in the previous month.
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