July 2, 2024/CSL Research
According to data from the National Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s crude oil production, including condensates, rose by 1.46% month-on-month to 1.49 million barrels per day (mbpd) in May 2024 from 1.45 mbpd in April 2024.
However, excluding condensates, production decreased to 1.25mbpd from 1.28mbpd the previous month, a reduction of 29,984 barrels per day. Nigeria’s oil output has been subdued in recent years, hitting a low of 0.94 mbpd in September 2022. Several factors contribute to these low production levels, including rampant crude oil theft in the Niger Delta, aged oil fields, inadequate maintenance of crude oil terminals leading to frequent shutdowns, and a decline in investments in the upstream oil and gas sector.
Further analysis of the data shows varying production levels across different terminals in May 2024. Production from Bonny Terminal decreased by 9.69% to 4.25 million barrels in May 2024 from 4.70 million barrels in April 2024. Forcados terminal’s crude oil production decreased by 3.57% to 6.92 million barrels in May from the 7.18 million barrels produced in the previous month. Escravos Terminal produced 4.20 million barrels in May, an increase of 6.63% from the 3.94 million barrels produced in April 2024. Production at the Brass terminal increased by 0.17% while production at the Qua Iboe terminal decreased by 7.76%.
Consequently, the nation has suffered substantial revenue losses, and the low production levels have led to a significant decline in foreign exchange (FX) supply, given that crude oil sales are a major source of FX for the country. Despite efforts by the Federal Government to enhance pipeline surveillance and combat oil theft, progress has been sluggish and inconsistent. We maintain our oil production forecast at 1.56 million barrels per day (mbpd)
for FY 2024. We expect the federal government’s initiatives to revive dormant oil and gas assets to slightly boost crude oil production in the second half of the year.
However, it is important to note that our forecasted production level remains well below the daily production target of 1.78 million barrels outlined in the 2024 budget.
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