Nigeria has faced a significant revenue loss of approximately N636.3 billion due to a persistent decline in monthly oil production since January 2024. Data obtained from a Federal Government agency revealed a drop in crude oil output from 1.43 million barrels per day (mbpd) in January to 1.25 mbpd in May.
According to figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the total volume of crude oil produced in January was 44.22 million barrels. By May, this had decreased to 38.8 million barrels, indicating a production shortfall of 5.43 million barrels over the five-month period.
During this time, the price of Brent crude, the global benchmark, increased marginally from $80.12 per barrel in January to $81.75 in May. Concurrently, the exchange rate of the naira against the US dollar deteriorated, averaging N1,434.1/$ in May. This combination of reduced production and fluctuating economic factors led to the estimated revenue loss of N636.3 billion.
The trend of declining production was marked by a drop to 1.32 mbpd in February, further declining to 1.23 mbpd in March. There was a slight recovery to 1.28 mbpd in April, but production fell again to 1.25 mbpd in May. The ongoing reduction in oil output has been attributed to frequent pipeline vandalism and crude oil theft.
Efforts to combat these issues have been ongoing but with limited success. On June 13, 2024, the Nigerian National Petroleum Company Limited (NNPC) called on the judiciary to establish a special court to prosecute those involved in oil theft and pipeline vandalism. This plea was made by NNPC’s Group Chief Executive Officer at a workshop on the Petroleum Industry Act 2021, emphasizing the need for expedited legal proceedings in such cases.
The NNPC emphasized the critical role of the judiciary in supporting security measures aimed at curbing oil theft and vandalism. They recommended the creation of a special court for such offences or the implementation of accelerated hearing processes with strict sanctions to deter potential offenders.
The judiciary’s support is deemed essential for the success of security strategies deployed by NNPC and other stakeholders in the oil and gas industry. Prompt judicial action is necessary to ensure that the gains from the Petroleum Industry Act are not undermined by illegal activities, which continue to pose a significant threat to Nigeria’s economic stability.
Crude oil theft has also severely impacted the operations of refineries in Nigeria, reducing government revenue from oil exports and affecting the earnings of international oil companies operating in the region. The NNPC remains committed to working with all stakeholders to maximize the benefits of Nigeria’s natural resources for national economic and social development.
