Following the reopening of the Forcados crude oil pipeline by Shell Petroleum Development Company in October and the recent clampdown on illegal pipeline connections at various locations, the nation’s crude oil production volume improved by 8.18% month-on-month to 1.01mbpd (1.23mbpd with condensates) from 0.938mbpd (1.14mbpd with condensate) recorded in September 2022. Based on data from the National Upstream Petroleum Regulatory Commission (NUPRC), the increase in volume was largely driven by increases in the production volumes from both the Forcados and Bonny terminals. 

At the Forcados terminal, average daily production volume increased to 0.076mbpd (0.084mbpd with condensates) in October 2022 from 0.004mbpd (zero condensate in September) recorded in September 2022. At the Bonny terminal, average daily production volume increased to 0.052mbpd (0.06mbpd with condensates) in October 2022 from 0.006mbpd (0.007mbpd with condensates) recorded in September 2022. Although, average daily production volume at the Qua Iboe terminal declined month-on-month by 3.08% to 0.161mbpd (0.163mbpd with condensates) in October 2022, it has remained the highest contributor to total volume since July 2022. 

We note that crude oil production has maintained a steady decline from 1.4mbpd in January, to 1.26mbpd in February, to 1.24mbpd in March, to 1.22mbpd in April and to 1.02mbpd in May 2022. There was a transient recovery in June to 1.16mbpd but production declined again to 1.08mbpd in July, 0.97mbpd in August and 0.94mbpd in September. At 1.6mbpd budgeted for 2022, the total expected volume from January to October was 486.4 million barrels while the actual volume produced was 343.34 million barrels. 

Consequently, as of 31 October 2022, there was a cumulative (January to October) shortfall of 143.06 million barrels amounting to a gross revenue shortfall of US$10.44bn at US$73 per barrel budget benchmark. We are hopeful that the Federal Government will sustain its reinforced pipeline surveillance and clampdown on oil bunkering, hence, we expect further improvement in the crude oil production volumes. By extension, we anticipate some respite in the fiscal space amid relative stability of the international crude oil price.