Nigeria’s oil production saw a downturn in May, decreasing to 1.25 million barrels per day (mbpd) from 1.28 mbpd in April, according to OPEC. This drop marks a concerning trend in the country’s oil output, which had briefly recovered in April after a slump in March.
While OPEC’s figures, sourced from Nigerian authorities, report this lower output, secondary sources suggest a slightly higher production rate of 1.42 mbpd for the same period, indicating some discrepancy in the data but confirming an overall decline.
The decline in oil production is attributed to several factors, including massive crude oil theft in the Niger Delta, ageing oil fields, poor maintenance of crude oil terminals, operational shutdowns, and reduced investments in the upstream oil and gas sector. These issues have significantly impacted Nigeria’s revenue, exacerbating financial challenges. Despite efforts by the federal government to enhance pipeline surveillance and crack down on oil theft, results have been slow and inconsistent, according to analysts from CSL research.
This situation presents a major challenge for President Bola Tinubu, as oil theft and pipeline sabotage continue to hinder Nigeria’s oil output and export capabilities. Foreign direct investment (FDI) in the sector has dropped sharply, with figures for the first half of 2023 falling to less than half a billion dollars, far below the $22.5 billion peak in 2019. The oil industry, once a beacon for FDI in Africa, has seen its appeal diminish due to ongoing security problems and economic instability, making it difficult for Nigeria to meet ambitious production targets and fully exploit its vast oil and gas reserves.