The African Energy Chamber (AEC) predicts a sharp decline in the output of crude oil on the continent in 2024, which might provide a significant economic challenge for Nigeria and other African nations that produce gas and oil.
The N26.01 trillion 2024 budget is based on oil production of 1.7 million barrels, notwithstanding Nigeria’s economic struggles brought on by poor oil production, theft, vandalism, and an unreliable operating environment.
In October, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said that as of September 2023, the country’s oil production had reached 1,346,562 barrels per day (bpd).
According to the AEC’s “State of African Energy 2024 Outlook” study, oil output in Africa is expected to decrease from 6.9 million barrels per day to 6.62 million barrels per day.
African nations are anticipated to process their crude domestically at this time. Numerous refinery projects are already scheduled to begin operations in the upcoming year.
There are nine refineries (774,900 bpd) in Egypt, five in Algeria (303,700 bpd), five in Libya (380,000 bpd), and four in South Africa (545,000). There are three state-owned refineries in Nigeria, with a combined capacity of 445,000 bpd. The Dangote Refinery has a capacity of 650,000 bpd, while BUA refinery produces roughly 200,000 bpd.
Additionally, there are modular refineries with a capacity of 27,000 bpd, and the Niger Republic is also expanding
Even as gas projects in Nigeria are stalled because of gas feedstock, refineries are already having difficulty obtaining crude oil to run their operations. According to a forecast by the AEC, oil output in Africa is expected to reach 6.77 million barrels per day (bpd) in 2023–2024.
NJ Ayuk, Executive Chairman of the African Energy Chamber, stated: “We ought to take advantage of every chance to maximize our oil and gas resources.”
Ayuk expressed regret over the bad news of diminishing oil production in Africa, despite the fact that most African producers are already having difficulty meeting their OPEC quotas.
According to Ayuk, “every oil drop extracted is a pathway to economic growth—revenue that can fund infrastructure development, social programs, and much-needed technology transfers from the international oil companies (IOCs) that invest in Africa.”
The release of the AEC report coincides with the Nigerian Upstream Regulatory Commission's attempt to enforce Section 109 of the Petroleum Industry Act (PIA), which established the Domestic Crude Supply Obligation (DCSO) to ensure that Nigeria’s refineries have access to enough crude oil.
According to reports by the Nigerian Extractive Industries Transparency Initiative (NEITI), only 23% of deepwater assets were produced in 2021, despite the regulator threatening to withhold export permits, fine $10,000, and penalize 50% of their fiscal price per barrel of crude oil not delivered to refineries.
Earlier in the month, the Niger Delta region’s insecurity, fiscal difficulties, joint venture difficulties, crude oil theft, and other problems plaguing the oil and gas industry were the focus of discussions among the leadership of the National Assembly, the International Oil Companies, and the Independent Petroleum Producers Group (IPPG).
Over 85% of Nigeria’s foreign exchange profits come from the oil and gas sector, which is the primary driver of the country’s underdevelopment, growing debt, and foreign exchange problem. At the moment, Nigeria produces roughly 1.3 million barrels of oil. That amounts to around 50% of the nation’s daily production in 2011 when it was producing 2.4 million barrels.