Nigeria’s oil industry is facing a major setback.
A 27 percent drop in active oil rigs has put the country’s target of producing 2 million barrels per day (bpd) by December 2024 at risk.
This decline is based on data from the November 2024 report by the Organisation of Petroleum Exporting Countries (OPEC).
According to OPEC, Nigeria’s functional oil rigs dropped to 11 in October.
In the first three quarters of 2024, the country averaged 17, 17, and 14 rigs, respectively.
Oil rigs are vital structures that extract and process petroleum and natural gas from beneath the seabed.
A high rig count signals active exploration and production, attracting investment and boosting the economy.
Industry experts say the falling rig count is a troubling sign.
NJ Ayuk, executive chairperson of the African Energy Chamber, warned that Nigeria is losing its appeal to investors.
“Nigeria, a previously bright spot on big oil and gas investors’ radar screens, has dimmed significantly,” Ayuk said.
He pointed out that countries like Namibia, Ivory Coast, Angola, and the Republic of Congo are now more attractive to investors.
Ayuk stressed that with two-thirds of Nigeria’s revenue coming from oil, the flight of investors is a serious concern.
Data from the National Bureau of Statistics (NBS) paints a grim picture.
Foreign capital investments in Nigeria’s petroleum sector have plummeted from $720 million in 2016 to just $3.64 million in 2023.
During the first quarter of 2024, the sector received no funds from the $3.38 billion in capital imports into the country.
Despite these challenges, the federal government remains optimistic.
Heineken Lokpobiri, Minister of State for Petroleum, believes increased production is the solution.
“The shortest way for us to get out of our current economic problems is to increase production,” Lokpobiri said.
He reiterated the government’s target of hitting 2 million bpd by December 2024.
As of November, Nigeria’s production stood at 1.8 million bpd.
Mele Kyari, Group CEO of the Nigerian National Petroleum Company Limited (NNPC), confirmed the increase.
Kyari highlighted the efforts of NNPC and its partners in boosting production.
“The team has done a great job in driving this project of not just production recovery but also escalating production to expected levels,” Kyari said.
According to OPEC’s latest report, Nigeria recorded a slight increase in crude oil output in October.
Production rose by 35,000 barrels to 1.434 million bpd, up from 1.399 million bpd in September.
Direct communication from Nigerian authorities reported an average of 1.333 million bpd in October.
This was a modest increase from 1.324 million bpd in the previous month.
Experts say these gains are not enough to meet the ambitious target.
The falling rig count poses a significant challenge to sustaining and increasing production.
Without enough active rigs, hitting 2 million bpd may remain a distant dream.
Analysts warn that Nigeria must address the issues driving investors away.
Ayuk believes that attracting investment is crucial to reviving the sector.
He called for policies that would make Nigeria competitive in the global oil market.
Meanwhile, stakeholders are urging the government to intensify efforts to boost production.
They argue that Nigeria’s economy depends heavily on oil revenue.
Failure to meet the 2 million bpd target could worsen the country’s economic challenges.
For now, the government insists it is on track to achieve its goal.
But with the clock ticking, all eyes are on Nigeria’s oil industry.
The coming months will be critical in determining whether the target can be met.
If successful, it could signal a turnaround for the struggling sector.
However, if the current trends continue, Nigeria may face tougher times ahead.
