Shock as Nigeria suffers N636bn losss from oil production shortfall

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

Since January 2024, Nigeria has experienced a consistent decline in its monthly oil production, leading to a revenue shortfall of approximately N636.3 billion.

Data from a Federal Government agency revealed that Nigeria's crude oil production (excluding condensates) stood at 1.43 million barrels per day (mbpd) in January but fell to 1.25 mbpd by May.

Decline in Crude Production Causes Nigeria to Lose N636bn in Five Months
Source: UGC

According to figures from the Nigerian Upstream Petroleum Regulatory Commission, the total crude output in January was 44.22 million barrels, which decreased to 38.8 million barrels in May.

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This decline signifies a reduction of 5.43 million barrels in crude oil production over the period from January to May this year.

According to data from Statista, an international statistical firm, the average price of Brent crude oil, the global benchmark, was $80.12 per barrel in January and increased slightly to $81.75 per barrel in May.

Additionally, the average exchange rate of the naira against the dollar in May was 1,434.1/$.

The naira has been under pressure since the Central Bank of Nigeria unified the country’s foreign exchange markets on June 14, 2023.

Given the 5.43 million barrel decrease in crude oil production, the price of Brent, and the exchange rate in May, Nigeria incurred an estimated revenue loss of about N636.3 billion between January and May this year.

It was noted that Nigeria's crude oil production fluctuated over the first five months of the year.

Starting at 1.43 million barrels per day (mbpd) in January, output decreased to 1.32 mbpd in February and further declined to 1.23 mbpd in March.

Production then saw a slight increase to 1.28 mbpd in April, before dropping again to 1.25 mbpd in May.

The persistent decline in Nigeria’s oil production has been attributed to frequent pipeline vandalism and crude oil theft.

Despite the government's efforts to tackle this problem, success has been limited. Our correspondent exclusively reported that major oil companies have expressed concerns about how oil theft and pipeline vandalism are affecting crude supply to local refineries.

For example, on June 13, 2024, the Nigerian National Petroleum Company Limited called on the judiciary to establish a special court to prosecute those involved in oil theft and pipeline vandalism.

Source: Legit.ng