Nigeria’s Oil Growth Stalls at 5.7% Amid Production Issues

Nigeria, the largest oil producer in Africa, is encountering a notable setback as its oil Gross Domestic Product (GDP) growth decelerates to 5.7 percent in the initial quarter of 2024.

The country heavily relies on oil production, which constitutes around two-thirds of government earnings and 90% of its foreign exchange income.

According to the latest data from the Nigerian National Bureau of Statistics (NBS), the GDP growth of Nigeria’s oil sector slowed to 5.7 percent in Q1 2024, down from the 12.1 percent recorded in the preceding quarter. Crude petroleum GDP declined from 6.41 percent in Q4 2023 to 5.70 percent in Q1 2024.

During the first quarter of 2024, Nigeria maintained an average daily oil production of 1.57 million barrels per day (bpd), surpassing the daily average production of 1.51 million bpd registered in the same quarter of 2023 by 0.06 million barrels per day. This production volume also exceeded the fourth quarter of 2024 production figure of 1.55 million barrels per day by 0.02 million bpd.

“Why should a country like Nigeria which has been producing oil, exporting oil for the past 70 years not have a scientific way of metering, recording what leaves, what is pumped, what is sold and what is not sold? And it’s deliberate,” remarked Seriake Dickson, representing Bayelsa West in the National Assembly, during an interview on Channels Television.

Dickson, a former two-term governor of Bayelsa State in the South-South geopolitical zone of Nigeria, alleged that the official system and certain oil companies benefit from oil theft in the Niger Delta region.

The rampant oil theft from pipelines and wells has posed a significant challenge for President Bola Tinubu, damaging government finances and restricting the country’s output and exports.

Despite the current price of $82 per barrel, Nigeria has earned an additional revenue of $5 per barrel. However, the country’s 2024 budget was based on 1.78 million barrels per day (bpd) and $77.96 per barrel.

“The easiest and earliest way to address this foreign exchange problem is to increase oil production,” stated Festus Osifo, president of the Petroleum and Natural Gas Senior Staff Association of Nigeria.

Osifo further urged the government of President Tinubu to deploy military commanders to the Niger Delta region, where Nigeria’s oil is produced, to curb oil theft and enhance revenue generation.

In addition to grappling with oil production challenges, Nigeria is facing difficulties in finding buyers for its crude oil due to a demand shortfall from Europe. As per reports from traders specializing in the West African market, around 20 to 25 shipments of Nigerian crude for April loading are still seeking buyers, with prices facing a significant decline compared to normal trade conditions for this period.