Nigeria is facing a significant economic setback as the growth of its oil Gross Domestic Product (GDP) slows to 5.7 per cent in the first quarter of 2024.
This represents a sharp decline from the 12.1 per cent recorded in the previous quarter, according to data released by the Nigeria Bureau of Statistics.
The nation’s reliance on oil production is substantial, accounting for about two-thirds of government earnings and 90% of its foreign exchange income.
However, the oil sector’s sluggish GDP growth reflects ongoing challenges in the industry.
Further analysis shows that the crude petroleum GDP dipped from 6.41 per cent in the fourth quarter of 2023 to 5.70 per cent in the first quarter of 2024.
Despite the decline, Nigeria recorded an average daily oil production of 1.57 million barrels per day (bpd) in Q1 2024.
This is a slight increase compared to the daily average production of 1.51 million bpd in the same quarter of 2023 and 1.55 million bpd in the fourth quarter of 2023.
Recently, Senator Seriake Dickson, a member of the National Assembly representing Bayelsa West, criticized the inefficiencies and corruption within the oil sector during an appearance on Channels Television.
According to him, the lack of a scientific system for metering and recording oil production and sales, attributing the shortcomings to deliberate actions by those benefiting from oil theft.
Dickson, a former two-term governor of Bayelsa State, pointed out that the official security, oil, and federal systems are complicit in these activities.
Oil theft and sabotage have been major challenges for President Bola Tinubu’s administration. The issues have not only damaged government finances but also limited the country’s oil output and exports.
Major oil companies such as Shell and ExxonMobil have been compelled to exit their onshore assets due to the persistent threats.
At the current price of $82 per barrel, Nigeria earns an additional $5 per barrel compared to the country’s 2024 budget projection, which was based on an output of 1.78 million bpd at $77.96 per barrel.
Despite the increased earnings, the country has struggled to boost its oil production.
In a related development, Nigeria is set to offer up to 20% of its crude oil production for trading on its commodities exchange, according to Akinsola Akeredolu-Ale, the chief executive of the Lagos Commodities and Futures Exchange, in an interview with Bloomberg.
”The move aims to expand access to financing for the oil and gas industry, which is crucial to Nigeria’s foreign currency income,” Akeredolu-Ale said.
While Akeredolu-Ale did not provide a specific timeline for the commencement of crude oil trading on the exchange, he stated that the Lagos Commodities and Futures Exchange is collaborating with the local Securities and Exchange Commission to meet the requirements for trading crude.
