Nigeria’s Oil Production Faces Uncertainty in Q4 – Society of Energy Editors
The Society of Energy Editors (SEE) has projected that Nigeria’s oil production will continue to face uncertainty in the fourth quarter (Q4) of 2024, amid ongoing challenges in the oil and gas industry. In its Fourth Quarter Outlook for the Nigerian Energy Sector, released in Lagos, the SEE highlighted the persistent decline in oil production, stressing that without significant reforms, the situation is unlikely to improve.
The Society’s outlook, the third of its kind this year, follows similar projections issued for the second and third quarters, pointing to ongoing issues that hinder progress in the sector. These challenges, according to the SEE, include low investment, stagnation in exploration and production (E&P) activities, and inefficiencies within key institutions like the Nigerian National Petroleum Company Limited (NNPC) and the Ministry of Petroleum Resources.
“Investments in the sector are at an all-time low and are likely to remain unchanged in Q4. Exploration and production are also at historic lows, and we expect this trend to continue unless critical decisions are made,” the report stated. It further emphasized that the NNPC Ltd. has struggled to drive projects forward, and the divestment of International Oil Companies (IOCs) could negatively impact Joint Venture operations through the end of the year.
The SEE’s outlook also pointed to stagnation in domestic refining progress. Although the commencement of refining operations at the Dangote Refinery offers hope for boosting Nigeria’s refining capacity and reducing fuel imports, disputes between the refinery’s management and NNPC Ltd. over crude oil supply and pricing could disrupt its operations, potentially impacting fuel supply stability in Q4.
The report also cast doubt on the revamp of NNPC-owned refineries and the restoration of Nigeria’s petroleum distribution infrastructure, stating that no significant progress is expected on these fronts in the coming months. With 14 oil rigs currently operating in Nigeria as of August 2024, the number is projected to remain unchanged in Q4. By comparison, Nigeria’s oil rig count averaged 10.75 rigs between 1995 and 2024, with a peak of 23 rigs in February 2020.
On a broader scale, the SEE noted that Africa’s refining capacity is estimated at 3.6 million barrels per day (mb/d), reflecting the continent’s growing domestic demand for refined petroleum products. However, challenges such as outdated refineries, financing issues, and technical constraints continue to impede progress in Africa’s refining industry.
In conclusion, the Society of Energy Editors urged the Nigerian government and industry stakeholders to implement reforms that would address these longstanding issues, stabilizing the nation’s oil production and energy sector performance moving forward.
