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Nigeria’s Oil and Gas Reserves Increase in 2024

According to the most recent report from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s average crude oil production decreased by 7% to 1.23 million barrels per day (excluding condensates) in March 2024 from 1.32 million barrels per day in February.

This marks the second consecutive monthly decline after reaching a 2-year peak of 1.43 million barrels per day in January 2024. The decline in March was primarily attributed to reduced production at four major terminals. Specifically, production at the Bonny, Bonga, and Forcados terminals decreased by 33%, 21%, and 14% respectively compared to February.

Following the release of the March crude oil data, Senator Heineken Lokpobiri, the Minister of State for Petroleum Resources, issued a circular explaining that the drop in the country’s oil production volume was mainly due to issues on the Trans Niger Pipeline and maintenance activities carried out by some oil companies, which have since been resolved.

Nigeria has been grappling with low oil output in recent years, with the country hitting its lowest production volume of 0.94 million barrels per day in September 2022. Various factors such as crude oil theft in the Niger Delta, aging oil fields, inadequate maintenance of crude oil terminals, shutdowns, and reduced investments in the upstream oil and gas sector have contributed to the country’s diminished production levels, resulting in substantial revenue losses. Despite ongoing efforts by the federal government to enhance pipeline surveillance and combat oil theft, progress has been slow and inconsistent.

In response to significant foreign exchange (FX) shortages, the Naira depreciated to a historic low of N1,915 against the dollar. However, recent weeks have seen a notable improvement in FX liquidity, leading to the Naira appreciating to N1,142.38 per US dollar as of Friday at the Investors and Exporters (I&E) window. This enhanced FX liquidity has been primarily driven by foreign portfolio investments in government bonds, albeit with high repayment costs.

Given that crude oil receipts are a key source of FX for Nigeria, a substantial increase in production would bolster FX supply and address liquidity challenges more sustainably in the FX market. The sustainability of current FX rates in the upcoming months is contingent, in part, on heightened crude oil production volumes, underscoring the critical importance of addressing all impediments affecting low production for all stakeholders.

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