Nigeria’s oil output fell month on month (MoM) to 1.249 million barrels per day (mb/d) in June 2023, according to the Organization of Petroleum Exporting Countries (OPEC) in its July 2023 Monthly Oil Market Report. This is a 5.5 percent increase above the 1.184 million mb/d recorded in May 2023.
This output falls short of the country’s OPEC-assigned oil production quota of 1.74 mb/d, as well as the 2023 budget target of 1.69 mb/d. This is a key source of concern, as the country faces money generation issues, with oil, the country’s lifeblood, being underutilized due to decreasing production levels.
It also raises concerns because it is lower than the predicted output in the 2023 budget, meaning that government revenue may be lower than projected, resulting in a greater deficit of finances. The decision by OPEC to reduce Nigeria’s oil production quota to 1.38 million barrels per day beginning in January 2024 suggests that the country may be unable to considerably improve its oil profits from the existing allocation before the decrease takes effect.
The reduction in oil output is being blamed on oil theft and bad infrastructure. As a result, it is necessary to put in place robust security infrastructure to combat bunkering, vandalism, and other illegal acts that undermine the country’s crude oil production potential.
Transparency is also necessary in the sector to prevent under-reporting of actual outputs. It is vital to build a business-friendly environment in the country in order to attract investments in the oil sector in order to replace aging infrastructure, bridge financial gaps, and, as a result, increase output. Modern technology should also be utilized to control oil facilities such as pipelines in order to detect oil leaks and vandalism and to respond rapidly to attacks or damage to oil installations that could result in output loss.