Nigeria’s oil production is significantly below its OPEC quota and budget benchmarks, causing severe pressure on the industry.
With a quota of 1.5 million barrels per day, recent data shows a shortfall of over 3.011 million barrels in the first five months of the year, leading to a revenue loss of around $264.97 million.
The country’s oil output has declined to approximately 1.2 million barrels per day from a peak of 2.5 million in the early 2000s, worrying experts who warn of further declines without drastic intervention.
This shortfall could push the oil revenue deficit to N1.0 trillion by year-end, affecting the government’s budgeted revenue for 2024.
The Federal Government has already indicated it may not meet its revenue estimate due to the oil sector’s underperformance.
A recent Finance Ministry report highlighted the risk of failing to achieve the projected 77.4% revenue increase if oil production continues to lag by 27%.
Nigeria’s oil industry struggles with infrastructure decay and lack of investment, leading to declining output.
Despite having significant hydrocarbon resources, the country’s current production is far below capacity.
The Chairman of the Independent Petroleum Producers Group highlighted the low reserves-to-production ratio, warning of the potential for domestic refining capacity to surpass crude production, possibly making Nigeria a net importer of crude oil.