The average daily crude oil production in Nigeria during the second quarter of 2024 has dropped from 1.5 million barrels per day (bpd) to 1.4 million bpd.
This information comes from the latest data released by the Nigeria Bureau of Statistics (NBS) on the quarterly Gross Domestic Product (GDP) for 2024.
The data revealed that in Q1 2024, average crude oil production stood at 1.57 million barrels per day (bpd), but this figure declined by 0.16 million bpd in the second quarter.
The report also indicated that the oil sector contributed a modest 5.7% to the total GDP during the same period.
Further breakdown of the Crude Oil Output
Meanwhile, on a year-to-year basis, the oil sector saw real growth of 10.15% to the GDP, marking a 23.58 percentage point improvement from the -13.43% recorded in the same quarter of 2023.
In terms of crude oil volume, the crude oil output rises from 1.22 million bpd in the second quarter of 2023 to 1.41 million in the same period in 2024.
The report highlights that crude oil output is experiencing a modest year-on-year increase. However, the data also reveals slight declines on a quarterly basis, which are raising concerns about the sector’s performance.
These quarterly drops cast doubt on whether the federal government’s projection of 2 million barrels per day by year-end will be met.
Why this matters
While the oil sector contributes only a small fraction to Nigeria’s GDP, it remains a crucial source of foreign exchange and revenue for the federal government.
Its significance extends beyond economic metrics, playing a vital role in funding various government functions.
The increase in crude oil output has a substantial impact on the country’s fiscal health. Higher production levels translate into increased revenue, which supports budgetary allocations for essential sectors such as infrastructure, education, and health.
Recently, Olufemi Soneye, NNPC’s Chief Communication Officer, emphasized the company’s critical role in Nigeria’s economy. According to Soneye, NNPC is the largest contributor of tax revenue to the Federation Account.
In its 2023 audited financial report, NNPC reported a substantial payment of N2.69 trillion in income tax to the federal government.
What you should know
The oil sector continues to be troubled by insecurity and low investment, exacerbated by the exit of international oil companies (IOCs) and unresolved issues regarding the approval of oil asset transfers.
- Last month, the NNPCL declared a renewed effort to tackle the challenges hindering crude oil production, as output has stagnated over the past five months.
- Nairametrics earlier reported that Nigeria’s crude oil production in the month of July rose to 1.307 million barrels of crude oil daily according to the monthly oil market report of the Organisation of Petroleum Exporting Countries (OPEC).
- According to the report, the country added 30 thousand barrels daily to its production when compared to the production figure for last month which stood at 1.276 million barrels daily in June 2024.
- In addition, OPEC reported that Nigeria remained Africa’s largest oil producer. Libya followed closely, producing 1.175 million barrels per day in July.
Meanwhile, the Minister of Petroleum Resources, Heineken Lokpobiri, has repeatedly stated that the country aims to reach a daily production of two million barrels before the end of the year.
