The federal government’s ambition of industrialising the country may remain a pipedream, as it continues to export most of the country’s fossil fuels, which hit 86 per cent of total crude oil output and 36 per cent of total gas produced in-country in the whole of 2024.
Data obtained from the Nigerian Upstream Petroleum Commission (NUPRC) showed that the export market continued to dominate as compared to the domestic supply, thereby significantly slowing down the nation’s plan to power its economy.
THISDAY analysis of the data showed that the 86 per cent export was out of the 1.54 million barrels per day average crude oil production in 2024, while the 36 per cent gas export was from a total daily production of 6.9 billion Standard Cubic Feet (Bscf) of gas.
If Nigeria continues to export all its oil and gas without leveraging these resources for domestic industrialisation, this will likely slow down its drive to achieve a modern economy.
Oil and gas are not just revenue earners; they are seen as critical inputs for energy generation, manufacturing, and petrochemical industries. Without local refining and utilisation, Nigeria will likely remain dependent on imports for refined petroleum products, chemicals, and industrial raw materials.
In turn, this dependency will increase the costs for local industries, making them less competitive as well as worsen energy shortages, leading to high production costs and reduced industrial output.
According to the data, sustained collaboration between the NUPRC, government security forces and other stakeholders contributed to the production restoration in 2024, further catalysed by the NUPRC’s ‘Project One Million Barrels Per Day’ incremental production initiative.
Although the government admitted that the export market dominated the whole of 2024, it added, however, that the local market improved from 115,531 bpd in Q1, 2024 to about 304,542 bpd in Q4, as local refining began to take shape.
“While condensates are significant because they are not subject to Organisation of Petroleum Exporting Countries (OPEC) production quotas, crude oil is the primary driver of Nigeria’s oil and gas revenue, the majority of which came from export.
“Whereas export market is dominant in all the four quarters, the domestic supply has increased by 164 per cent, from 115,531 bpd in the 1st Quarter to about 304,542 bpd in the 4th Quarter (YTNov), due to the commencement of Dangote Refinery,” it added.
At full capacity, the Dangote refinery was expected to source a significant portion of its crude feedstock domestically to rebalance the dominance of crude exports in favour of domestic demand.
However, the 650,000 Dangote refinery has complained of not getting enough crude oil locally and has resorted to importing the commodity, while the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) continues to issue licences for oil companies to import fuels despite Nigeria’s expanding local capacity.
Also, for years, the Crude Oil Refinery Owners Association of Nigeria (CORAN), led by Mr Momoh Iyarekhua, has engaged the authorities to ensure they fulfill their domestic crude oil supply to local refineries, which he said would rather prefer to export the crude than to sell it to local refineries.
The producers have always said that they have international obligations and want to use their intermediary companies to deal with the local refineries rather than dealing directly as stipulated in the Petroleum Industry Act (PIA).
The effect is that this will usually lead to a price increase as a result of the high premium on the crude oil which will be charged by the intermediary companies, CORAN had argued.
As for gas, of the 3.96 bscf/d, that’s 57 per cent of Associated Gas (AG) and 2.92 bscf/d (43 per cent) of Non Associated Gas (NAG), amounting to 6.9 bscf/d produced in 2024, export sales were 36 per cent.
On the other hand, domestic sales were 27 per cent, field use of gas was significantly high at 30 per cent, while 7 per cent was flared.
“Most of the total gas production is from associated gas, that is gas produced in association with oil. Any impediments to oil production such as evacuation constraints either due to vandalism or other operational challenges impacted gas production during this period.
“The export market continues to dominate as compared to the domestic supply. The domestic market continues to be challenged by dearth of infrastructure in both the offtake and supply value chain.
“Issues relating to back pressure (upstream) and low pressure (midstream and distribution) challenges continue to limit supply potential through this critical pipeline. In a similar vein, the non-completion of the OB3 pipeline will potentially threaten the availability of about 300MMSCFD from ANOH gas plant intended for supply to the domestic market early 2025,” the report added.
Stressing that there are other issues relating to offtakers inability to offtake due to downstream distribution system limitations, the commission said that together with other critical stakeholders, it continues to optimise the Domestic Gas Delivery Obligation administrative framework to deepen in-country gas utilisation.
“On the other hand, gas flaring numbers have been limited to 7 per cent. Through the administration of the gas flaring thresholds for all gas producing fields and facilities, the commission aims at achieving the 2030 zero routine flaring target for the country through a progressive incremental tightening of the threshold values,” it added.
SOURCE : THISDAY
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