NIGERIA’s fiscal crisis worsened last month as the country again failed to meet up with the daily production quota the Organisation for Petroleum Exporting Countries (OPEC) allocated it.
The production figure dropped by 6.2 per cent, from 1.16 million barrels per day (bpd) recorded in June to 1.08 million bpd in July.
The slump came barely a month after OPEC increased Nigeria’s quota to 1.826 million bpd, which economic and financial analysts believe could have helped the country shore up its external reserves and solve foreign exchange problems.
The fall in production level was disclosed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in its latest crude oil and condensate production data for July 2022.
Condensate is a mixture of light liquid hydrocarbons, similar to light (high API) crude oil — usually separated from natural gas stream at the point of production (field separation) when the temperature and pressure of the gas are dropped to atmospheric conditions.
In January, February, March, April, and May, the country’s crude oil production averaged 1.39 million bpd, 1.25 million bpd, 1.24 million bpd, 1.22 million bpd, and 1.02 million bpd, respectively.
Nigeria has consistently failed to meet the 1.8 million bpd production quota set by OPEC, a situation that has affected the country’s income, and has made the Federal government resort to borrowing from the Central Bank of Nigeria (CBN) to the tune of N19. 9 trillion, according to June records.
Already, the state governors are worried about the effect of this level of borrowings by the government, as informed sources said discussions are underway with President Muhammadu Buhari on the possibility of converting the debt into long-term bond.
The minister of state for petroleum resources, Timipre Sylva, had said in March this year that poor investment and the exit of oil majors were affecting Nigeria’s ability to meet the oil production quota.
Sylva also mentioned security issues as another major factor contributing to the lack of significant growth of the sector, adding that the drive towards renewable energy by climate enthusiasts had discouraged funding for the industry.
Apart from the security concerns, international funders such as the World Bank and the African Development Bank are channeling their fundings to renewable energy targets in a bid to address concerns of climate change.
Industry analysts say Nigeria needs to hasten implementation of the Petroleum Industry Act (PIA) to give room for investments into the renewable energy space as prescribed by the law.
“There is a provision for the renewable energy in the PIA. As such investors would be interested to explore that space on the renewable energy space,” the Partner, Zera Advisory and Consulting and former Chairman of the Nigeria Society of Petroleum Engineers, Joe Nwakwue, told THE ICIR.