CEM REPORT | Growth in the Nigerian oil sector has continued in its negative trend as it was in the third quarter of 2021 following under performance in daily crude production
Report from the Nigerian Bureau of Statistics released Monday shows that real GDP growth of the Nigerian oil sector was –26.04% (year-on-year) in Q1 2022 indicating a decrease of 23.83% points relative to the rate recorded in the corresponding quarter of 2021. Growth decreased by 17.99% points when compared to Q4 2021 which was –8.06%.
Quarter-on-Quarter, the oil sector recorded a growth rate of 9.11% in Q1 2022. The Oil sector contributed 6.63% to the total real GDP in Q1 2022, down from the figures recorded in the corresponding period of 2021 and up compared to the preceding quarter, where it contributed 9.25% and 5.19% respectively.
The poor growth of the sector lies in the underperformance of the sector in daily crude production having been plagued by crude theft and sabotage over the years coupled with the recently experienced underinvestment in new fields and divestment by oil companies.
The nation in the first quarter of 2022 recorded an average daily oil production of 1.49 million barrels per day (mbpd), lower than the daily average production of 1.72mbpd recorded in the same quarter of 2021 by 0.23mbpd and lower than the fourth quarter 2021 production volume of 1.50mbpd by 0.01mbpd.
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According to the data contained in the NBS report, daily crude production has been on free fall from Q1 2021 after a slight recovery to 1.72 mbd in the quarter. Output fell to 1.61 mbd and further down to 1.57 in Q2 and Q3 respectively.
From a 6 year peak of 2.07 mbd in Q1 2020, crude production consistently fell in the following Q2, Q3, and Q4 to 1.81 mbd, 1.67 mbd and 1.56 mbd respectively.
CEM reported early this month that Nigeria Lost $3.5Bn to crude oil theft in 2021 equivalent of about 10 per cent of its foreign reserves. According to experts, Nigeria had witnessed overtime increasing amount of point of origin and terminal oil losses, with an average of 1.6 pbd in 2021 and an average of 1.2 pbd in 2022.
In recent months, major oil companies that have operated in the country over the decades have started selling out their stake in the sector contrary to expectations now the government have taken solid steps to sanitize the sector with the coming on stream of the Petroleum Industry Act
Last week, CEM reported that TotalEnergies, the French Firm launched the sale of its 10% stake in Nigerian joint venture SPDC. The confirmed the sale of its interest in 13 onshore fields and three in shallow water, producing over 20,000 barrels of oil equivalent per day. The sale includes infrastructure such as 3,500 km of pipelines connecting to two key crude export terminals, Bonny and Forcados.
But for litigation, Shell would probably have concluded its sale of interest in the sector. ExxonMobil, several months ago, has also announced plans to divest from their Nigerian oil assets.