Angola has become Africa’s top oil producer following the decline in production from Nigeria.
Industry insiders predict that Nigeria could soon be the third after Libya if productivity does not increase.
According to oil analysts, Nigeria’s production struggle is coming at the worst time, as oil prices have jumped, partly because of Russia’s invasion of Ukraine.
The Nigerian oil regulation commission disclosed that the country’s oil production during August dropped to 972,000 barrels per day, down from about 1.1 million barrels per day in July.
That allowed Angola to pass Nigeria in monthly oil production for the third time this year. The other months were May and June. Nigeria’s oil production has been declining steadily for months. Authorities blame rising crude oil theft and sabotage at production sites.
The Nigerian National Petroleum Corporation (NNPC) had recently revealed that thieves from all levels of society, including religious groups, were stealing 200,000 barrels of crude oil per day. Oil and gas expert Emmanuel Afimia said Nigeria’s position as Africa’s biggest oil producer has consequences.
The lost production also translates into billions of dollars in lost revenue. Global oil prices skyrocketed in March soon after Russia’s invasion of Ukraine, and oil is still trading at around $96 per barrel.
At that level, crude oil is trading 36 per cent above Nigeria’s benchmark for its 2022 budget. But in July, the NNPC reported zero revenue from crude oil exports, compared with $5.96 million in earnings in June.
Last Friday, President Muhammadu Buhari instituted a Committee on National Economy and immediately discussed issues of oil theft with the new team. He said the theft is putting the country in a precarious economic position.
“The fall in production is essentially due to economic sabotage. Producing at about half our OPEC quota has deprived us of much-needed revenue and foreign exchange. The government is working tirelessly to reverse this situation,” the president stated.
Afimia said authorities must address theft and invest more in oil production before companies can raise monthly output.
“Once the country is able to increase its surveillance and improve security as well, it will really encourage existing firms to maximize their production. That confidence will be restored,” he said.