December 13, 2023/CSL Research

According to the latest monthly report from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s average crude oil production (including condensates) declined to 1.46 million bpd in November 2023 from 1.56mbpd in October, marking the second consecutive month on month decline, after it reached a year high of 1.57mbpd in September. Crude oil output (including condensates) had declined marginally by 0.7% to 1.56mbpd in October from 1.57mbpd in September. Production at the Bonny, Forcados and Escravos terminals declined by 21.7%, 15.4% and 8.1% respectively in November compared with October. 

Oil output from Nigeria has been low in recent years and the country recorded its lowest oil production volume of 1.14mbpd in September 2022. The country’s low production has been attributed to massive crude oil theft in Nigeria’s oil rich Niger Delta, ageing oil fields, poor crude oil terminal maintenance, shutdowns, and reduced investments in the upstream oil and gas sector. The situation has led to significant revenue losses for the country. The Federal Government has sustained efforts at reinforcing pipeline surveillance and clampdown on oil theft, but results appear slow and inconsistent. Industry data showed crude oil production output rallied for 6 months from a record low in September 2022, but production declined again in April 2023 and picked up again in May 2023 but has begun to decline again. 

Nigeria has struggled with significant FX shortages causing the Naira to fall to a record low against the dollar. The Naira has continued to depreciate due to an acute shortage of supply amidst a growing demand and the country’s low oil production is a major reason behind the shortage of foreign exchange. Crude oil receipts are a major source of FX for the country and a significant increase in production will increase FX supply and ameliorate the liquidity issues in the FX market. Again, the country’s revenue generation capacity has been hampered for a while due to low oil production resulting in a growing budget deficit. The outlook for oil production going into 2024 does not appear promising considering how production has fared this year