The primary reasons for the drop in oil revenue in the third quarter of 2024 were outdated pipeline infrastructure and operational inefficiencyThe CBN challenges the Nigerian National Petroleum Company’s Limited forecast that two million barrels of oil will be produced every day According to the apex bank’s latest economic report, oil revenue dropped 24.72% from N1.73 trillion in the second quarter of the year to N1.30 trillion
Henzodaily.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
The Central Bank of Nigeria (CBN) has identified operational inefficiencies and aging pipeline infrastructure as the main causes of the decline in oil revenue in the third quarter of 2024.
NNPC said the company has already achieved production increase to 1.8 million bpd. Photo Credit: CBN
Source: UGC
As a result, the CBN questions the Nigerian National Petroleum Company’s (NNPC) Limited prediction that daily oil production will reach two million barrels per day.
In its most recent economic report, The Guardian reported that the apex bank revealed that oil revenue fell by 24.72% to N1.30 trillion from N1.73 trillion in the second quarter of the year.
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This number likewise fell 75.39% short of the quarterly objective, primarily because of the numerous shutdowns brought on by aging facilities and pipelines.
But the CBN research cautioned that unless immediate action is done to solve operational and infrastructure issues, Nigeria’s objective of two million barrels per day (bpd) of oil production by the end of 2024 is still in jeopardy.
The report also pointed out that infrastructure deficiencies, theft, and vandalism continued to hinder revenue growth, even though crude oil output increased slightly to 1.33 million barrels per day (mbpd) from 1.27 mbpd in the previous quarter.
NNPC had also said it was working hard to achieve the two million bpd target. The Chief Corporate Communications Officer, NNPC Ltd, Olufemi Soneye, said the company has already achieved production increase to 1.8 million barrels per day (bpd), with expectations that the newly introduced Production Monitoring Command Centre (PMCC) would spur its ambition of two million bpd.
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CBN stated,
“Oil revenue fell by 24.72 per cent to N1.30tn, relative to the level in Q2 2024, on account of lower receipts from petroleum profit tax and royalties.
“It was also 75.39 per cent short of the quarterly target due to shut-ins, arising from ageing oil pipelines and installations.”
The ageing infrastructure not only hindered production efficiency but also impaired Nigeria’s ability to meet its OPEC production quota.
Nigeria Leads Oil-Producing Countries in Africa
Henzodaily.ng reported that Nigeria has become one of the top oil-producing countries in Africa with the highest petrol prices, despite the deregulation of the downstream petroleum sector.
The country spent a whopping N4.39 trillion or $9.7 billion subsidising petrol in 2022.
In the following year, data showed that the Nigerian government paid N3.6 trillion as a subsidy on petrol after underpayments were reported until the complete deregulation of the industry.
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Source: Henzodaily.ng