Nigeria has faced a significant setback in its crude oil production, failing to meet its Organisation of Petroleum Exporting Countries (OPEC) quota and resulting in an estimated loss of $13.5 billion. Despite efforts to increase production since the third quarter of 2022, Nigeria produced only 371.6 million barrels from January to October 2023, falling short of the expected 522 million barrels—a 30 percent deficit.
This production shortfall, coupled with an average oil price of $90 per barrel, has led to a substantial financial loss for the country. Concurrently, Nigeria is actively seeking new loans and negotiating with fellow oil-producing nations to inject much-needed foreign exchange into its economy.
In a recent development, President Bola Tinubu’s government announced that Saudi Arabia had agreed to provide financial support for Nigeria’s foreign exchange reforms.
According to a report by This Day Live, Information Minister Mohammed Idris stated that Saudi Arabia pledged a substantial foreign exchange deposit to enhance Nigeria’s liquidity. This announcement followed Tinubu’s successful negotiation of a joint foreign exchange liquidity program with the United Arab Emirates (UAE).
Moreover, the Nigerian government has disclosed plans to secure a fresh $1.5 billion loan from the World Bank and approached the African Export-Import Bank for a $3 billion debt-for-oil deal. These efforts aim to address the fiscal gap in the 2023 budget and stabilize the foreign exchange market.
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reveals that Nigeria’s oil production has consistently fallen short of its 1.74 million barrels per day quota. The highest production since January 2022 was in October, with 1.35 million barrels per day, still 390,000 barrels per day below the OPEC mark.
The reasons for this underperformance include oil theft, pipeline vandalism, and declining investment in the oil and gas sector. The Minister of Petroleum Resources (Oil), Senator Heineken Lokpobiri, has prioritized ramping up production to 2 million barrels by the end of the year. He acknowledged the critical role of oil in Nigeria’s economy and the need to increase production to support strategic national projects.
Lokpobiri highlighted a marginal increase in output over the past few months, attributing it to the government’s decision to bypass problematic pipeline networks and employ alternative transport methods for its crude. This increase, though slight, has moved Nigeria’s production closer to 1.4 million barrels per day.
The challenges Nigeria faces in meeting its OPEC quota and the resultant financial losses underscore the urgency to address issues in the oil and gas sector and explore sustainable alternatives for economic growth.
