July 12, 2024/CSL Research
Earlier this week, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced that the total daily average crude oil production, including condensates,increased by 2.15% month-on-month (m/m) to 1.50 million barrels per day (mbpd) in June 2024, up from 1.46 mbpd in May 2024.
The average crude oil production excluding condensates grew marginally to 1.28 mbpd in June 2024, compared to 1.25 mbpd in May 2024, remaining below the Organization of the Petroleum Exporting Countries (OPEC) quota of 1.50 mbpd, which excludes condensates.
Nigeria’s crude oil production in 2024 has remained low due to persistent challenges such as pipeline vandalism, theft, and operational disruptions. These issues have consistently hindered production levels, keeping it below the domestic target of 1.78 mbpd set in the 2024 budget.
In June 2024, the Forcados oil terminal achieved the highest production level, producing 7.10 million barrels (mb), which was a 2.59% m/m increase from its May 2024 output of 6.92 mb. However, this was a 10.89% y/y decrease from the 7.97 mb produced in June 2023. Conversely, the Brass terminal recorded the lowest output level at 793,526 barrels in June 2024, marking a 0.56% m/m increase from 789,096 barrels in May 2024 but a 29.15% y/y decline from 1.12 mb in June 2023.
Despite the slight m/m increase in the output levels of crude oil in June 2024, Nigeria’s oil output has remained subdued, reaching a low of 0.94mbpd in September 2022. Consequently, the nation has suffered substantial revenue losses and the low production levels have also resulted in significant decline in FX supply, since crude oil sale is a major source of FX for the country.
Despite efforts by FG to bolster pipeline surveillance and crack down on oil theft, progress has been sluggish and inconsistent. Given these challenges, it is unlikely that there will be a significant increase in crude oil production this year. We maintain our initial view that oil production will reach 1.56 million barrels per day (mbpd) in 2024, implying an average of 1.60mbpd in the second half of the year.
Our view is driven by the government’s proactive initiatives to reactivate inactive oil terminals and revive dormant oil wells. We maintain our projection of a 6.90% growth in the oil sector for 2024.
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