Nigeria’s Oil Production Decline and the Battle Against Theft: Insights and Challenges

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An employee walks along an upper level walkway aboard the Agbami floating oil production, storage and offloading vessel (FPSO), operated by Chevron Corp., in the Agbami deepwater oilfield in the Niger Delta, Nigeria, on Wednesday, Dec. 2, 2015. Nigeria plans to review agreements for deep offshore oil production to seek more favorable terms in line with the latest industry standards, state-owned Nigerian National Petroleum Corp. said. Photographer: George Osodi/Bloomberg

According to the recent Monthly Oil Market Report by the Organisation of Petroleum Exporting Countries (OPEC), Nigeria’s crude oil production faced a consecutive decline, hitting 1.231 million barrels per day (mbpd) in March, marking a notable drop since the beginning of the year. This decline is attributed to decreased production compared to the previous month, with February recording a higher output of 1.322 mbpd.

Despite starting strong with 1.427 mbpd in January, Nigeria’s oil production saw a downward trend, continuing into March. However, data from OPEC reveals that the country’s first quarter average production of 1.327 mbpd surpassed the fourth quarter of 2023’s average of 1.313 mbpd, indicating a fluctuating but overall higher output.

Nevertheless, challenges persist, with oil theft and pipeline vandalism significantly impacting Nigeria’s oil industry. The Nigerian National Petroleum Company Limited reported a staggering 155 incidents of oil theft in a single week, including illegal pipeline connections, illicit refineries, vessel infractions, and oil spills across the Niger Delta region. These incidents not only disrupt production but also endanger the environment and local communities.

The severity of oil theft is underscored by recent revelations, where over N4.3 trillion worth of crude oil was stolen in 7,143 pipeline vandalism cases over a five-year period. This crisis, labeled a national emergency by the Nigeria Extractive Industries Transparency Initiative, poses a grave threat to economic growth, business operations, and the sustainability of oil exploration and exploitation.

Despite ongoing efforts by the national oil company to combat theft, including arrests and seizure of illegal vessels and vehicles, the battle against oil theft remains an uphill struggle. International oil companies have been forced to reassess their operations, with some shifting focus from onshore to deep offshore fields or exiting the country altogether.

As Nigeria grapples with the twin challenges of declining oil production and rampant theft, decisive action and comprehensive strategies are imperative to safeguarding its valuable natural resources and fostering sustainable growth in the oil sector.

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