Nigeria’s oil production has dipped below 1 million barrels per day (mmbpd) for the first time since we became a heavy oil-producing country 50 years ago.
You’ll see from the chart that Nigeria's production wasn't this poor even during the pandemic when global lockdowns eroded demand for crude oil and refined products.
Given Nigeria’s record low oil production, we must consider how Nigeria loses oil revenue.
The Nigeria Extractive Industries Transparency Initiative (NEITI) records that Nigeria loses oil revenue from metering errors, theft and production shut-ins.
Metering issues mean that there are accuracy issues with Nigeria’s recorded production. However, theft, vandalism, lack of investment and production shut-ins are still the significant causes of Nigeria’s low production levels.
Recent data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) puts our August production at 972,394 barrels per day, a new low for Africa’s former oil-producing giant. Since we wrote about Angola surpassing us in May, our production has consistently stayed below Angola’s. It is now heading towards numbers that might soon be lower than Algeria’s production figures. So, when OPEC releases the September report with August numbers, don’t be surprised if you see that Algeria has surpassed Nigeria in oil production—which will make us the 3rd in Africa.
This doesn’t bode well for a country that earns over 80% of its export revenue from oil. When you factor in our declining foreign investment figures, all signs indicate that our foreign exchange crisis could worsen.
But how sure are we that these are Nigeria’s total production figures?
Here’s what we know for sure: Nigeria’s oil production figures today are supplied primarily by companies operating in the sector. You see, the numbers the NUPRC and the government bandy about as our oil production volumes are figures recorded by flow meters installed by oil companies. Flow meters are installed on pipelines and flow stations (the point where the oil is extracted) to measure how much oil is produced. While companies should have their meters installed, it’s also in the government and Nigeria’s best interests to have our own meters installed for independent checks and balances. But, it was just last week that the Federal government announced its intention to install flow meters on Nigeria’s pipelines.
This has implications for all the ways we lose oil revenue in Nigeria, and today’s article will focus on this: How much oil is Nigeria losing from the avenues that we