Despite Colossal Security Spending, Nigeria Raised Oil Output by Meagre 6.5% in 2023

Despite humongous military spending and local pipeline surveillance contracts awarded to secure Nigeria’s critical assets in the Niger Delta, the country was only able to raise its crude oil and condensate output by a meagre 6.5 per cent in 2023.

A year-on-year analysis of data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) covering 2022 and 2023 showed that Nigeria produced roughly 502.4 million barrels in 2022, regarded as one of the worst years for the sector in Nigeria due to theft and sabotage.

However, in 2023, the breakdown of the figures from the industry regulator indicated that the country drilled about 536.2 million barrels of crude, an increase of about 33.8 million barrels compared to the preceding year, 2022.

For some years, Nigeria has suffered massive oil theft in its Niger Delta region, even though the menace has further accelerated in the last four years.

During this period, the country has been unable to meet its Organisation of Petroleum Exporting Countries (OPEC) production quota.

The Nigerian economy has also suffered serious foreign exchange illiquidity, since the country gets over 90 per cent of its foreign exchange earnings from the export of the commodity, leading to the current crisis in the exchange market.

The Nigeria Extractive Industries Transparency Initiative (NEITI) estimates that the country may have lost about N4.3 trillion between 2017 to 2022.

In the same vein, during the same period, 7,143 pipeline vandalism cases were recorded while roughly 208.63 million barrels of crude were lost to theft and outright vandalism.

According to NEITI studies, the authorities spent N471.49 billion to repair and maintain the pipelines during this period.

With the weakening FX inflows, Nigeria has recently resorted to borrowing to shore up the flow of dollars within the system, notably approaching AfreximBank for a recent $3.3 billion oil-for-debt loan deal.

Last year, the National Security Adviser (NSA) Nuhu Ribadu, disclosed that as much as 400,000 barrels of crude were stolen daily from the region.

But a review of the data from the NUPRC for 2022, showed that in January of that year, Nigeria produced oil and condensate of 51.9 million barrels, in February, it was 42.6 million barrels while in

March, April and May the figures were 46.3 million, 44.4 million and 39.6 million respectively.

Also, in June of 2022, the country drilled 42.0 million barrels of oil; 40.7 million in July; 36.5 million in August when local surveillance security became officially involved; 34.1 million in September and 38.1 million in October. In November and December, output was 42.4 million and 43.8 million barrels respectively. This took the total production for that year to 502.4 million barrels.

However, in the whole of 2023 when production increased marginally, the country produced 536.2 million barrels.

The breakdown for that year is as follows: 46.8 million barrels; 43.5 million; 47.5 million; 35.5 million; 44.3 million; 44.9 million; 40.4 million; 43.8 million; 47.1 million; 48.4 million; 43.9 million and 48.1 million barrels.

Aside the increasing military spending for the navy and other related forces officially protecting oil and gas assets in the Niger Delta, in August 2022, when crude theft and vandalism worsened, the Nigerian National Petroleum Company Limited (NNPC) contracted local security surveillance groups to complement the work of the security personnel.