Nigeria’s June Crude Oil Production Rises to 1.27 Million Barrels Daily – OPEC

In June 2024, Nigeria’s average daily crude oil production saw a slight increase, rising to 1.276 million barrels per day (bpd) from 1.251 million bpd in May. This marginal increase of 25,000 barrels daily was reported in the Organisation of Petroleum Exporting Countries (OPEC) monthly oil market report for June 2024. The data, reflecting direct communication with Nigerian authorities, presents a complex picture of Nigeria’s oil production landscape.

Despite the modest increase, when secondary sources are considered, Nigeria’s daily average crude oil production in June stood at 1.362 million bpd, a slight decline of 10,000 barrels compared to May’s 1.372 million bpd. This discrepancy between primary and secondary data highlights the ongoing challenges in accurately tracking production levels. Nevertheless, Nigeria maintained its position as Africa’s largest oil producer, closely followed by Libya, which produced 1.2 million bpd in June.

Production trends among OPEC+ countries revealed broader shifts within the global oil market. Russia surpassed Saudi Arabia as the leading oil producer within the OPEC+ cartel, with average daily production reaching 9.14 million bpd, while Saudi Arabia produced 8.93 million bpd. Overall, total crude oil production among OPEC+ members, also known as the Declaration of Cooperation (DoC) group, decreased by 125,000 bpd, totaling 40.81 million barrels daily.

For OPEC members specifically, total crude oil production fell by 80,000 barrels to 26.57 million bpd in June, compared to 26.65 million bpd in May. This decline in production among OPEC members coincided with a slight dip in the OPEC Reference Basket (ORB) price, which decreased by 37 cents, or 0.4%, to an average of $83.22 per barrel. Meanwhile, the ICE Brent front-month contract remained stable at $83.00 per barrel, and the NYMEX WTI front-month contract saw a minor increase of 8 cents, or 0.1%, to an average of $78.70 per barrel.

Despite these fluctuations, Nigeria’s inability to meet its OPEC production quota of 1.5 million bpd and its budget target of 1.78 million bpd for the first half of 2024 poses significant challenges. The persistent shortfall in meeting production targets hampers the revenue mobilization efforts of President Bola Tinubu’s administration. The Minister of Petroleum Resources, Heineken Lokpobiri, previously stated that Nigeria aims to achieve two million bpd in daily production by next year, but this goal appears increasingly difficult to attain given the current outlook.

Several factors continue to plague Nigeria’s oil sector, contributing to its production woes. Insecurity remains a significant concern, with militant activities and sabotage of oil infrastructure frequently disrupting operations. Additionally, low investment levels in the sector hinder capacity expansion and modernization efforts. The exit of International Oil Companies (IOCs) from Nigeria further exacerbates the situation, reducing the expertise and capital available for upstream activities. Moreover, lingering issues related to the approval of the transfer of oil assets create further uncertainties and delays in project implementation.

In response to these challenges, the Nigerian National Petroleum Corporation Limited (NNPCL) has declared a renewed focus on addressing the factors affecting crude oil production. The NNPCL’s commitment to tackling these issues is critical as the country seeks to stabilize and eventually increase its output. However, overcoming the complex web of insecurity, investment deficits, and bureaucratic hurdles will require concerted efforts and strategic reforms.

The broader implications of Nigeria’s production challenges extend beyond its borders, impacting the global oil market and influencing OPEC+ dynamics. As Africa’s largest oil producer, Nigeria’s production levels play a crucial role in the continent’s overall output. The ongoing struggles to meet production quotas and targets reflect deeper structural issues within the Nigerian oil industry that need to be addressed to ensure long-term sustainability and growth.

The slight increase in Nigeria’s average daily crude oil production in June 2024, despite being a positive development, underscores the need for more comprehensive measures to address the underlying issues. Enhanced security measures, increased investments, and streamlined regulatory processes are essential to unlocking Nigeria’s full production potential. Achieving these objectives will not only benefit Nigeria’s economy but also contribute to stabilizing the global oil market.

Furthermore, the global oil market’s response to production changes among OPEC+ members, including Nigeria, highlights the interconnectedness of national production strategies and international oil prices. The slight decline in the OPEC Reference Basket (ORB) and the stability of key oil contracts such as the ICE Brent and NYMEX WTI illustrate the market’s sensitivity to production adjustments and geopolitical developments.

In conclusion, while Nigeria’s crude oil production saw a marginal increase in June 2024, the broader context of production challenges, market dynamics, and strategic goals paints a complex picture. The ongoing struggle to meet production quotas and targets, coupled with insecurity and investment issues, necessitates a comprehensive approach to reforming and revitalizing Nigeria’s oil sector. As the largest oil producer in Africa, Nigeria’s production levels have significant implications for both the continent and the global oil market. Addressing these challenges effectively will be crucial for Nigeria’s economic stability and growth in the years to come.