In an apparent reflection of the measures taken to achieve stability in the global market by the Organisation of Petroleum Exporting Countries, OPEC, pipeline vandalism and oil theft in the Niger-Delta, Nigeria's oil production has fallen by 30 per cent in the last four years to 1.423 million barrels per day, mb/d in 2020 from 2.041 million barrels per day, mb/d in 2017.
The figure excludes 2020 condensate production, according to the data obtained by Vanguard Energy from OPEC's monthly market reports between 2017 and 2020.
Year-on-year, YoY, the nation's output declined by 19.3 per cent to 1.648 mb/d in 2018 from 2.041 mb/d in 2017.
The production level, however, rose by 6.6 per cent to 1.765 mb/d in 2019 from 2018 figure before declining again by 19 per cent to 1.423 mb/d in 2020.
This steady or consistent drop in output constitutes a serious threat to the nation's economy, especially as the world continues to adopt new forms of clean energy.
However, an investigation by Energy Vanguard showed that the impact could have been more severe on the nation's economy, if not for its huge condensate production and export, estimated at between 300,000-400,000 barrels per day, bpd.
For instance, although Nigeria produced 2.041.6 mb/d for the implementation of its N7.44 trillion budget in 2017, it was possible to realise its 2.2 mb/d target at $44.5 per barrel and exchange rate of N305 per dollar because of the condensate production.
According to PKMG Limited, "Oil price was projected at $44.5/barrel but closed at $66.73/barrel by the end of December 2017, due to the increase in oil price, a proportional increase in revenue was expected.
"However, the estimated oil revenue was curtailed by an average actual oil production of 1.515 mb/d, instead of the anticipated 2.2 mb/d.
"Moreover, the increase in production occurred at the tail end of the year, thereby ensuring an average shortfall in expected revenue.
Similarly, the 2018 budget was based on the production of 2.3 mb/d at $45 per barrel and N305 exchange rate, but the relatively high price, which stood at between $50 and $60 per barrel and condensate enabled Nigeria, to a great extent, close the gap despite its limited output, which stood at 1.648 mb/d.
However, the impact of the condensate was also felt in the process of implementing the 2019 and 2020 budgets.
According to the African Development Bank, AfDB, the limited output and relatively low crude prices have impacted negatively on the nation's Gross Domestic Product, GDP, the final value of the goods and services produced within a country during a specified period of time, normally a year.
In its latest Nigeria Economic Outlook, obtained by Energy Vanguard, AfDB stated: "Nigeria's economy entered a recession in 2020, reversing three years of recovery, due to fall in crude oil prices on account of falling global demand and containment measures to fight the spread of Covid-19.
"The containment measures mainly affected aviation, tourism, hospitality, restaurants, manufacturing and trade. Contraction in these sectors offset the demand-driven expansion in financial, information and communications technology sectors.
"Overall real GDP is estimated by AfDB to have shrunk by 3 per cent in 2020, although mitigating measures in the Economic Sustainability Programme, ESP, prevented the decline from being much worse.
"Inflation rose to 12.8 per cent in 2020 from 11.4 per cent in 2019, fuelled by higher food prices, due to constraints on domestic supplies and the pass-through effects of an exchange rate premium that widened to about 24 per cent. The removal of fuel subsidies and an increase in electricity tariffs added further to inflationary pressures.
"The Central Bank of Nigeria cut the policy rate by 100 basis points to 11.5 per cent to shore up a flagging economy. The fiscal deficit, financed mostly by domestic and foreign borrowings, widened to 5.2 per cent in 2020 from 4.3 per cent in 2019, reflecting pandemic-related spending pressures and revenue shortfalls".
Commenting on outlook and risks, it stated: "The economy is projected to grow by 1.5 per cent in 2021 and 2.9 per cent in 2022, based on an expected recovery in crude oil prices and production.
"Stimulus measures outlined in the ESP and the Finance Act of 2020 could boost non-oil revenues. Improved revenues can narrow the fiscal deficit to 4.6 per cent and the current account deficit to 2.3 per cent of GDP in 2021, as global economic conditions improve.
"Reopening borders will increase access to inputs, easing pressure on domestic prices and inflation, projected at 11.4 per cent in 2021.
"Downside risks include reduced fiscal space should oil prices remain depressed. In addition, flooding and rising insecurity could hamper agricultural production.
Apparently, responding to these and other fears, the government has indicated interest to expand investment through the instrumentality of the National Oil and Gas Excellence Centre, NOGEC, and utilise petroleum revenues, as a major instrument in diversifying the nation's oil-dependent economy.
Speaking at the recent commissioning of the centre in Lagos, President Muhammadu Buhari said: "The establishment of the National Oil and Gas Excellence Centre aligns with my administration's commitment to foster stability, growth and sustainability of the Nigeria Oil and Gas Industry, consistent with the economic development and sustainability agenda articulated in the National Petroleum Policy 2017, National Gas Policy, 2017, Economic Recovery and Growth Plan, ERGP, and the Economic Sustainability Plan, ESP, 2020.
"At the beginning of my administration, we set a clear roadmap for the oil and gas sector in order to deepen value from the nation's huge resource potentials and create opportunities for investors, both local and foreign, when I declared that: 'Nigeria is open for business.
"I am delighted that, since then, we have witnessed major final investment decisions in the sector such as the AKK Pipeline project, the NLNG Train-7 project, and the completion of the 5,000bpd Waltersmith Modular refinery.
"Our renewed drive for economic diversification, using the oil and gas industry as a pivot, remains on track as we expand government revenues and deploy them to grow our GDP, generate employment and eliminate poverty - all for the overall benefit of Nigerians."
Nevertheless, in an interview with Energy Vanguard, weekend, some experts, including Dr Bala Zaka, a Port Harcourt-based Energy analyst, called for immediate passage of the nation's Petroleum Industry Bill, PIB, required to bring about a restructuring of the industry, attract new investments, as well as diversify the nation's oil-driven economy.
Specifically, he said: "The world is gradually moving away from oil. Also, Nigeria's major oil buyers, especially China and India, are still battling with the coronavirus pandemic, meaning that it might take a while to return to the era of very high production, demand and price."
Vanguard News Nigeria