February 13, 2023/CSL Research

Nigeria’s crude oil production volume for January 20223 was up 1.85% month-on-month to 1.26mbpd (without condensates) and 5.71% m/m to 1.49mbpd (with condensate). Based on data from the National Upstream Petroleum Regulatory Commission (NUPRC), the increase in volume was largely driven by increases in the production volumes from both the Forcados,
Brass and Erha oil fields. The Forcados terminal contributed the highest (7.56 million barrels) to total volume while Qua Iboe terminal ranked next with a total of 4.82 million barrels in January 2023. However, we note that volumes declined by 35.23% and 1.72% for Bonny and Qua Iboe terminals respectively. Having recorded four consecutive increases in production volumes, we believe the pipeline surveillance and clampdown on oil bunkering may be successful in increasing oil production volumes if sustained by the Federal government.
Hence, we continue to anticipate some respite in the fiscal space amidst expected stability of the international crude oil price in 2023.

We expect the oil sector which has been in a three-year recession to rebound in 2023. Our expectation is based on the success of the increased pipeline surveillance and clampdown on oil theft by the government and the commencement of 160,000 Amukpe-Escravos export terminals. Hence, we expect oil production to improve to 1.60mb/d, translating to 10.00% oil sector GDP growth. Nigeria’s crude production has been marred by force-majeures in oil terminals, the resurgence of oil theft and waned investments. Consequently, the sector recorded an average contraction of 20.16% as of 9M-2022.

Following the clampdown on crude oil theft and pipeline vandalism, the country’s crude oil production volume began to rise in October 2022 after a steady decline from 1.4mbpd in January 2022. At 1.69mbpd (inclusive of condensates) budgeted for 2023, the total expected volume for January was 52.39million barrels while the actual total volume produced was 46.32 million barrels (with condensates), implying a shortfall of 6.07 million barrels. We remain hopeful that the current efforts of the Federal Government at curbing crude oil theft and pipeline vandalism will be sustained.

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