The Central Bank of Nigeria (CBN) has highlighted critical issues surrounding the country’s aging oil infrastructure as a significant factor contributing to the sharp decline in oil revenue during the third quarter of 2024. According to the CBN, operational inefficiencies, particularly within the pipeline systems, have played a pivotal role in the underperformance of Nigeria’s oil sector. The apex bank has expressed doubt over the feasibility of the Nigerian National Petroleum Company (NNPC) Limited’s target of achieving a two million barrels per day (bpd) oil production rate.
In its latest economic report, the CBN revealed that oil revenue dropped by 24.72%, falling to N1.30 trillion compared to the N1.73 trillion recorded in the second quarter of 2024. This decline is a result of frequent shutdowns and disruptions, largely driven by the deteriorating condition of the country’s pipelines and other key oil infrastructure. The shortfall was even more alarming, with actual revenue falling 75.39% below the target set for the quarter.
The CBN’s report also warned that unless significant steps are taken to address these infrastructural challenges, Nigeria’s ambition of reaching an oil production target of two million bpd by the end of 2024 could remain unfulfilled. Despite a slight increase in production from 1.27 million bpd to 1.33 million bpd, the report noted that widespread theft, vandalism, and infrastructure deficiencies continued to hinder the sector’s potential to generate substantial revenue.
In response, the NNPC has expressed optimism about its efforts to meet the two million bpd goal. Olufemi Soneye, Chief Corporate Communications Officer for NNPC Ltd, revealed that production has already increased to 1.8 million bpd. The company is also confident that its newly established Production Monitoring Command Centre (PMCC) will support further improvements, bringing the two million bpd target within reach.
However, the CBN remains cautious, emphasizing that the deteriorating state of the oil pipeline infrastructure not only limits production capacity but also undermines Nigeria’s ability to meet its OPEC production quota. The report specifically attributed the decline in oil revenue to lower receipts from petroleum profit taxes and royalties, exacerbated by the frequent shut-ins linked to aging pipelines and facilities.
The ongoing challenges within Nigeria’s oil sector underscore the urgent need for investment in modernizing the country’s energy infrastructure to ensure sustainable growth and greater revenue generation.