Nigeria’s Rising Oil Output Falls Short of OPEC Quota
Nigeria’s daily average oil production climbed by 7.38% year-on-year in December 2024 to 1.667 million barrels per day (bpd) from 1.552 million bpd in December 2023. Despite this growth, the country missed its Organization of Petroleum Exporting Countries (OPEC) production quota of 1.5 million bpd and failed to meet the 1.7 million bpd benchmark set for the 2024 budget.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), daily oil production, excluding condensates, stood at 1.484 million bpd in December 2024. The peak daily production during the month was 1.79 million bpd, with the lowest at 1.57 million bpd. Forcados Terminal recorded the highest monthly output of 8.49 million barrels, followed by Bonny Terminal (7.78 million barrels) and Qua Iboe (4.15 million barrels).
Key Drivers of Output Growth
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, attributed the improved output to policy reforms, stakeholder collaboration, and investments. He highlighted initiatives like deregulating the downstream sector, enhancing community engagement, and removing regulatory bottlenecks, which collectively boosted production from 1 million bpd to 1.8 million bpd, including condensates.
Challenges: Pipeline Vandalism and Oil Theft
Despite progress, Nigeria’s oil production faces significant challenges, including pipeline vandalism, oil theft, and illegal refining. These issues reduced output by 5.6% from October’s peak of 1.8 million bpd to 1.7 million bpd in November 2024. Major players like Shell, ExxonMobil, and Eni have reported incidents of sabotage and theft, prompting divestment from onshore and swamp assets to offshore operations.
In 2023 alone, 94% of oil spills from Shell-operated facilities were attributed to illegal activities. Shell removed 675 illegal pipeline connections in 2023 compared to 468 in 2022, underscoring the scale of the problem.
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Regulatory Reforms and Investment Opportunities
The Petroleum Industry Act (PIA) of 2021 has positioned Nigeria to attract investments in the oil and gas sector. The 2024 Licensing Round awarded 25 blocks to both international and indigenous operators, signaling renewed investor confidence.
Engr. Gbenga Komolafe, NUPRC Chief Executive, emphasized the importance of regulatory clarity and operational transparency, which have led to increased rig activities, well interventions, and field developments. Nigeria’s oil and gas reserves now stand at 37.5 billion barrels and 209.26 trillion cubic feet, representing 30% and 33% of Africa’s reserves, respectively.
Combating Illegal Activities
The Nigerian National Petroleum Company Ltd (NNPCL) and security agencies have intensified efforts to combat oil theft, uncovering 33 illegal connections and destroying 72 illegal refineries between August 18 and 23, 2024. These actions are part of broader strategies to stabilize and grow the sector.
Future Prospects
While Nigeria has made notable progress, challenges remain in achieving sustainable production levels. The government’s focus on attracting investments, enhancing regulatory frameworks, and addressing security concerns is critical to unlocking the full potential of the nation’s oil and gas sector.
