By John Ikani
Nigeria’s economic engine is sputtering as oil sector growth, a critical component of the nation’s GDP, decelerated sharply in the first quarter of 2024.
The Nigerian Bureau of Statistics reported a significant slowdown in oil GDP growth, dropping to 5.7% from a robust 12.1% in the previous quarter.
This decline raises concerns about the country’s economic prospects, considering its heavy reliance on oil revenue.
Nigeria’s economy is heavily reliant on oil, with oil earnings contributing roughly two-thirds of government income and a staggering 90% of its foreign exchange.
The sluggish growth in the oil sector reflects ongoing challenges plaguing the industry.
A closer look at the data reveals that crude petroleum GDP dipped from 6.41% in the final quarter of 2023 to 5.70% in the first quarter of 2024.
Despite the decline in growth, Nigeria’s average daily oil production remained relatively steady at 1.57 million barrels per day (bpd) in Q1 2024.
This represents a slight increase compared to the daily production averages of 1.51 million bpd and 1.55 million bpd in the corresponding quarters of 2023.
However, concerns linger about inefficiencies and potential corruption within the oil sector. Senator Seriake Dickson, a prominent voice in the National Assembly, recently criticized these issues on Channels Television.
Dickson, who represents Bayelsa West, highlighted the lack of a robust system for accurately measuring and recording oil production and sales.
He attributed these shortcomings to deliberate actions undertaken by those profiting from oil theft.
The Senator further pointed out the potential involvement of official security, oil, and federal systems in these illicit activities.
Oil theft and sabotage have become significant challenges for President Bola Tinubu’s administration, not only impacting government finances but also hindering oil production and export capabilities.
The persistent threats have even forced major oil companies like Shell and ExxonMobil to exit their onshore assets in Nigeria.
On a brighter note, with the current oil price hovering around $82 per barrel, Nigeria earns an additional $5 per barrel compared to the country’s 2024 budget projections, which were based on an output of 1.78 million bpd at $77.96 per barrel.
However, despite the increased earnings per barrel, the nation continues to grapple with boosting overall oil production.
In a separate development, Nigeria is exploring the possibility of offering up to 20% of its crude oil production for trading on its commodities exchange, according to Akinsola Akeredolu-Ale, the CEO of the Lagos Commodities and Futures Exchange.
This initiative aims to expand access to financing for the oil and gas industry, a vital sector for Nigeria’s foreign currency income.
While a specific timeline for commencing crude oil trading on the exchange remains unclear, Akeredolu-Ale confirmed collaboration with the Securities and Exchange Commission to fulfil the necessary requirements for such trading.
