Nigeria and other oil and gas-producing countries in Africa may face serious economic problems in 2024 as the African Energy Chamber (AEC) projects a drastic reduction in the continent’s crude oil production.
While Nigeria is struggling economically due to low oil production coming on the backdrop of theft, vandalism and a generally elusive operating environment, the N26.01 trillion 2024 budget is built on oil production of 1.7 million barrels.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October said Nigeria’s oil production increased to 1,346,562 barrels per day (bpd) in September 2023.
‘The State of African Energy 2024 Outlook’ report released by AEC noted that oil production in Africa would fall from 6.9 million barrels per day to 6.62 million barrels per day.
This is coming at a time when African countries are expected to refine their crude locally. Already, several refinery projects are meant to come on stream from next year.
In Egypt, there are nine refineries (774,900 bpd), Algeria has five (303,700 bpd), Libya has five (380,000 bpd) and South Africa has four (545,000). Nigeria has three state-owned refineries (445,000 bpd), Dangote Refinery has 650,000 bpd, BUA refinery is about 200,000 bpd while other modular refineries have a capacity of 27,000 just as the Niger Republic is also expanding its refinery.
In Nigeria, refineries are already struggling to find crude oil to operate even as gas projects are stalling due to gas feedstock.AEC, in its report, stated that oil production in Africa in 2023 – 2024 would be around 6.77 million barrels per day (bpd).
Executive Chairman of the African Energy Chamber, NJ Ayuk said: “We should be seizing every opportunity to capitalise on our oil and gas resources.”
While most of the African producers are already struggling to meet OPEC quotas, Ayuk lamented that declining oil production in Africa is sad news.
Ayuk said: “Every drop of oil extracted is a pathway to economic growth – revenue that can fund social programs, infrastructure development, and much-needed technology transfers from the international oil companies (IOCs) that invest in Africa.”
The AEC report is coming at a time when the Nigerian Upstream Regulatory Commission is dragging oil producers in an attempt to enforce Section 109 of the Petroleum Industry Act (PIA), which introduced Domestic Crude Supply Obligation (DCSO) to Nigeria’s oil industry to ensure domestic refineries are not starved of crude oil supply.
Although the regulator is threatening a fine of $10,000, a penalty of 50 per cent of their fiscal price per barrel of crude oil not delivered to refineries and denial of export permits, reports by Nigerian Extractive Industries Transparency Initiative (NEITI) said a mere 23 per cent of deepwater assets produced in 2021.
Earlier this month, the leadership of the National Assembly, the International Oil Companies and the Independent Petroleum Producers Group (IPPG) were seeking leeway to crude oil theft, insecurity in the Niger Delta region, fiscals, joint venture challenges and other issues bedevilling the oil and gas sector.
Nigeria’s foreign exchange crisis, rising debt and gross underdevelopment are being fueled by the oil and gas sector which accounts for over 85 per cent of foreign exchange earnings. Nigeria’s oil production is currently at about 1.3 million barrels. That is about half of the production in 2011 when the country was producing about 2.4 million barrels per day.
SOURCE: guardian.ng
