In a significant boost to Nigeria’s oil sector, the Nigerian National Petroleum Company Limited (NNPC Ltd) has achieved a notable increase in daily crude oil production. This comes after the company declared a “state of emergency” to tackle long-standing challenges in the industry. Daily production climbed from 1.25 million barrels per day (mbpd) in June to 1.61 mbpd by July 23, 2024, signaling progress despite operational hurdles.
The decision to declare a state of emergency was announced by NNPC’s Group Chief Executive Officer, Mele Kyari, at the 2024 Nigeria Oil and Gas (NOG) Energy Week held in Abuja. Kyari’s bold move was aimed at reviving Nigeria’s crude oil production and expanding reserves.
“We have decided to stop debating the issues and declared war on the challenges affecting our crude oil production,” Kyari stated. “War means war. We know what needs to be done and are fully prepared to act decisively.”
Kyari explained that a thorough analysis of Nigeria’s oil production assets revealed the country could produce up to two million barrels daily without deploying new rigs. The primary obstacle, however, was inefficiency, including delays in procurement processes and other systemic issues. Declaring the state of emergency allowed NNPC Ltd to work closely with industry partners to swiftly address these barriers and ensure efficient production.
Just a month after the emergency declaration, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced the increased production figures. Despite operational issues at major oil terminals like Bonny, Brass, and Forcados, the NUPRC’s measures helped stabilize and boost output. The agency implemented innovative monitoring techniques, such as end-to-end production tracking and a mass balance methodology, to differentiate between operational and other losses.
These measures have been critical in addressing inefficiencies and ensuring transparency, leading to positive reactions from stakeholders in Nigeria’s oil sector. The increase in production also promises greater revenue for the federal government, an important development given Nigeria’s reliance on oil for economic stability.
Speaking during a public investigative hearing on oil theft and losses, NUPRC Chief Executive Officer, Gbenga Komolafe, shared encouraging insights. He highlighted Nigeria’s leadership as Africa’s largest crude oil producer, with proven reserves of 37.5 billion barrels and a production capacity of 2.19 mbpd.
However, Komolafe acknowledged ongoing challenges at key terminals, which required the Commission to adopt advanced methods for production monitoring. He detailed several innovative steps taken to improve accountability and efficiency:
- Advanced Cargo Declaration (ACD): This regulation ensures no crude oil is exported without proper documentation. Each cargo is assigned a unique identification number (UIN) for tracking.
- Upstream Metering Regulation: Reliable metering systems are mandated to account for all hydrocarbons produced and exported.
- Real-Time Cargo Tracking: Digital documentation and tracking systems were introduced to enhance visibility and streamline operations.
Under its mandate, the NUPRC oversees the exploration, development, and production of crude oil and natural gas. The Commission ensures technical and commercial compliance, optimizes tax revenue and royalty collection, and benchmarks costs. It also focuses on maintaining business continuity, sustainability, and environmental standards in the industry.
The 2021 Petroleum Industry Act (PIA) has expanded the Commission’s powers, granting it oversight of metering systems, publication of industry statistics, and issuance of certificates for export quality. These tools have strengthened NUPRC’s ability to regulate effectively and enhance Nigeria’s position in the global oil market.
Komolafe outlined additional priorities, including improving rig availability and reducing downtime. The Commission has hosted workshops aimed at unlocking heavy crude oil reserves and helping new Petroleum Prospecting License (PPL) holders achieve first oil production.
“These efforts are designed to maintain Nigeria’s leadership in Africa’s energy sector and ensure production sustainability,” Komolafe explained.
The collaboration between NNPC Ltd, the NUPRC, and other industry stakeholders has been key to the recent achievements. Kyari and Komolafe emphasized their commitment to continued engagement with partners to optimize Nigeria’s oil production. The improvements come as a testament to what coordinated efforts and decisive action can accomplish, even in the face of significant challenges.
The increase in production to 1.61 mbpd marks a critical milestone for Nigeria, highlighting the effectiveness of the state of emergency approach. It also reflects a broader effort to strengthen the country’s oil industry through transparency, accountability, and innovation. With proven reserves and untapped potential, Nigeria remains poised to solidify its status as a major player in global energy markets.
The government and regulatory bodies are now tasked with maintaining the momentum, ensuring that these gains translate into sustained economic growth and development for Nigeria. While challenges persist, the progress made in July 2024 offers a promising glimpse of what the future might hold for the nation’s oil sector.
