- A country with huge reserves does not automatically convert into high levels of production of petroleum, oil, and byproducts
- And this is precisely the case in Nigeria, which, despite having one of the world's most sought-after commodity in abundance, simply cannot produce enough of it
- Every month, community protests and operational difficulties have had a sporadic impact on production levels
Nigeria's economy is largely reliant on crude oil, making it quite ironic that at a time when the demand for the commodity is on the rise, the country is not producing enough to sell.
According to Oilprice the Brent crude price (the benchmark price for Nigerian oil) reached $77.83, the highest level in two months, indicating a return to pre-pandemic levels.
Unfortunately, operational issues at several oil fields have prevented Nigeria from meeting its daily production objectives of at least 1.54 million barrels per day.
Exercise Books, Textbooks, other Print materials to Become more Costly as Cost of Paper Imports hit N1.23trn
Data from the Organization of the Petroleum Exporting Countries (OPEC) shows Nigeria's oil production have consistently failed to reach 1.54bpd, the quota given to Nigeria.
PAY ATTENTION: Subscribe to Digital Talk newsletter to receive must-know business stories and succeed BIG!
In August, oil production was 1.27mbpd down from July 1.44mbpd.
In fact, the Nigerian National Petroleum Corporation (NNPC) in its FAAC report published on its website reported a 19.84% reduction in crude oil lifting to 8.66Mbbls from 11.58Mbbls reported in May 2021.
While also adding that it lost 4,187,500 barrels of oil in May owing to troubles at the production site, including community protests, pipeline vandalism, fire breakouts, among others.
For clarity, the average oil price for May is $68.53 when multiplied by the 4.18 million barrels lost this amounts to about $286.9 million(N118.2 billion) at the N412/$ exchange rate.
While Nigeria struggled, other oil-producing countries such as Saudi Arabia, Russia increased their production level to about 400,000 barrels per day each month.
Timipre Sylva, Nigeria's minister of state for petroleum resources, recently admitted to the difficulties when he told a group of journalists that Nigeria's oil fields were struggling.
He did, however, say that this was owing to technical problems in re-tapping reservoirs that had been shut in order to meet the previous 17 months' strict OPEC+ cutbacks.
He told SPglobal:
“We had some problems shutting down the reservoirs.
“Once a reservoir is shut down, it may be difficult to restart it.”
He did, however, promise that output will be back to about 1.7 million bpd by November and 2 million bpd by the end of the year.
Here are the 10 countries with the most oil reserves 2021
Venezuela (300.90 Bn)
Saudi Arabia (266.50 Bn)
Canada (169.70 Bn)
Iran (158.40 Bn)
Iraq (142.50 Bn)
Kuwait (101.50 Bn)
United Arab Emirates (97.80 Bn)
Russia (80.00 Bn)
Libya (48.40 Bn)
Nigeria (37.10 Bn)
Nigeria accidentally discover oil in northeast region
Meanwhile, Legit.ng had earlier reported that minister of state petroleum, Chief Timipre Sylva, said the country accidentally discovered 1 billion barrel of crude oil in the Northeast.
According to him, a lot of oil is yet to be found in Nigeria and there was a need for more exploration in the country as more oil would be discovered.
He also noted that when the Port Harcourt refinery is completed, President Muhammadu Buhari government would have achieved a lot.