Angola overtook Nigeria to emerge top African crude oil producer for the month of April, data from the Organization of Petroleum Exporting Countries (OPEC) has shown.
According to the April 2023 Monthly Oil Market Report (MOMR) published by the oil cartel, Angola recorded 1.06 million barrels per day (bpd) of crude production in April, up from 972,000 bpd recorded in March.
But Nigeria recorded an output of 999,000 bpd in April compared to 1.3 million bpd in March. The April output figure represented the lowest production rate the nation has recorded in 2023.
On an annual basis, Nigeria’s output level also indicated a drop of 16.7 per cent to 999,000 bpd in April 2023, from 1.2 million bpd recorded in the corresponding period of April 2022.
“Nigeria’s economy faced challenges in gaining momentum in the first quarter of 2023, with business activity and consumer spending remaining subdued, in addition to high input-cost inflation and lower employment levels compared with the previous year,” the oil cartel said in the report.
In recent years, Nigeria has recorded a surge in pipeline vandalism and crude oil theft incidents in its oil-producing region, a development that worsened the nation’s revenue challenge.
The recent drop in the country’s crude production comes at a time when the Nigerian government postponed the June deadline for subsidy removal.
Earlier in the month, data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that Nigeria produced an average of 998,602 barrels of crude oil per day in April. The figure represented a fall in production from the 1.2 million bpd recorded in March.
OPEC in its report noted that oil production from the 13 members of the cartel averaged 28.60 million barrels per day in April, lower by 191,000 bpd compared to March.
The report found that OPEC’s Gulf producers – Saudi Arabia, Kuwait and the United Arab Emirates – met output targets under the OPEC+ deal with steady production.
Three producers exempted from supply cuts -Libya, Iran and Venezuela – also recorded varying output. While Iranian output was steady, Libya’s output edged lower and Venezuelan production rose slightly, boosting global supply.
Earlier in April, OPEC had agreed to cut output by about 1.27 million bpd as part of a total 2 million bpd reduction OPEC+ pledged in 2022.
Losing that ground last occurred in April 2017 to the same rival, when the two nations were production by both nations averaged above half a million barrels daily, according to Bloomberg’s data.
Crude theft is a massive racket in Nigeria with roots in the Niger Delta region where thieves have built an industry of organised crime having links to politicians, officials in the public service and even the military. It has also come with immense implication for the region’s environment.
The crisis reached a head between January and March when Nigeria lost $1 billion to crude theft. That is about the sum the country needs to fight malnutrition among 4.1 million people needing urgent humanitarian aid in the country’s north-east this year according to the United Nations.
At current prices, the stolen oil is worth more than $10 billion, which is equivalent to N4.3 trillion (at N430 to a dollar). This financial loss is more than 50 per cent of Nigeria’s external reserves. It is also more than double Nigeria’s total revenue between January and April, a period when Nigeria’s total revenue was unable to service its debt and the country had to borrow for everything else including payment of workers.
For the first time since 2015, the world is in the midst of a sustained oil boom, yet Africa’s leading producer is not tapping from the proceeds. The escalating geopolitical tensions in Eastern Europe have seen crude oil prices rise to an average of $112 per barrel in the first half of 2022.
Libya, which pumped 1.08 million barrels of oil last month according to the survey, might also displace Nigeria on the continent’s top oil production hierarchy if the trend persists.
Data issued by the industry watchdog, Nigerian Upstream Petroleum Regulatory Commission, for August showed output at 972,000 barrels, implying the figure jumped to 1.18 million barrels when condensate, a by-product of natural gas production not permitted to be factored into OPEC quotas, is added.
The theft has in part denied Nigeria the windfall from the oil price boom fuelled by Russia’s conflict with Ukraine, which the likes of Saudi Arabia, Iraq and big oil corporations are fast cashing in on.
The other reason is the costly amount the country spends on subsiding the cost of petrol. It may have to commit N6.7 trillion to fuel subsidy in 2023 if the arrangement is retained.
With this development, Nigeria may slowly be losing its influence in the global market, and it may be difficult for Nigeria to contribute to decisions in the global market as time goes on. And most importantly, buyers may start to panic.
Last week, Nigeria’s oil workers union said massive crude oil theft was putting worker safety and jobs at risk and threatened to go on strike if the issue is not addressed.
Nigerian authorities say they have improved surveillance of oil assets, especially in areas prone to bunkering and vandalism.
This month, security authorities arrested 122 oil thieves and said operatives recovered nearly 36 million liters of stolen oil and 22 million liters of diesel.
We therefore urge the Nigerian government Nigeria to increase its surveillance and improve security as well, it will really encourage existing firms to maximize their production. That confidence will be restored.
