FRI 15 APRIL, 2022-theGBJournal | Nigeria’s oil sector continues to grapple with low crude oil production, reflecting age-long challenges facing the sector.
Based on the OPEC’s Monthly Oil Market Report (MOMR), Nigeria’s crude oil production (excluding condensates) averaged 1.35mb/d in March (February: 1.38mb/d) – 21.5% below the OPEC+ production agreement (1.72mb/d) for the month.
Accordingly, average crude oil production settled at 1.38mb/d in Q1-22 (Q4-21: 1.32mb/d). In our opinion, the prominent factors responsible for the recurring low crude oil production level include massive theft and vandalism, difficulties in restarting the oil wells for operation after the COVID-19 induced shutdown, infrastructure decay, and divestments given the challenging business environment amidst companies’ move to cleaner energy sources.
Overall, we do not expect a significant improvement in crude oil production over the short term, given the nature of challenges hampering production.
Accordingly, despite the rally in crude oil prices, we expect the government’s oil revenue performance to remain underwhelming over the short term.
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