Nigeria’s crude oil output declined by 12.56% in the month of July to 1.29 million barrels per day (bpd) from 1.48 million bpd in June.
The data released by the Nigerian Upstream Petroleum Regulatory Commission reveals a year-on-year reduction of 1.52 percent from 1.31 million bpd.
This drop in production comes at a critical time when global oil prices are on the rise and the nation’s pressing need for foreign exchange.
The temporary closure of the Forcados terminal, a key facility, was a major factor contributing to this decline as production plummeted by 58.4 percent to 3.29 million bpd from 7.9 million bpd in June due to the shutdown.
Brent crude, the international oil benchmark, surged from $74.51 per barrel to $89.31 per barrel in July, highlighting Nigeria’s missed opportunity to capitalize on these higher prices.
Jide Pratt, COO of Aiona and country manager of Trade Grid, stressed the urgency of addressing the situation to ensure Nigeria can maximize its gains from the oil and gas sector. Pratt also emphasized the importance of preventing oil losses through theft and inefficiencies and raising the standards for tracking and measuring production.
Pratt proposed several measures to enhance revenue, including short, medium, and long-term incentives to attract and retain investment in both offshore and onshore rigs. Achieving a production level of at least 2 million bpd is crucial for boosting revenue, supporting local refineries, and potentially exploring the implications of open quotas.
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The suspension of Forcados crude oil loadings by Shell Petroleum Development Company (SPDC) due to a potential leak underscored the challenges in the Nigerian oil industry. Escravos oil terminal stood out as the leading crude oil output source in July, producing 4.87 million bpd.
Olufola Wusu, an energy lawyer and partner at Megathos law firm, explained the multifaceted reasons for the oil and gas extraction decline, affecting associated gas available to stakeholders, including liquefied natural gas (LNG) companies.
He said: “There is a glaring need to address the issue of asset insecurity, in the form of attacks on pipeline and other critical assets that is not only hampering production but is also encouraging the rapid migration from onshore fields to offshore fields, (remarkably the offshore fields have been largely prolific, nearly to the point of covering up the shortfall from the onshore fields).
“Industry stakeholders need clear assurance to drill new wells to shore up reserves, followed by regular and transparent allocation of oil and gas blocks to capable local and foreign investors.”