Nigeria’s crude oil production has dropped by 29% to 1.56 million barrels per day, against the country’s budget target of 2.2 million bpd, the Minister of State for Petroleum Resources, Emmanuel Kachikwu (photo) revealed.

The Minister said the country’s production reduced by 700,000 bpd below the budget’s target production. The shortfall was as a result of the crisis in the Niger Delta region, Today News reports.

He added that Nigeria must produce 1.1 million bopd between now and the end of 2017 in order to meet the 2016 budget expectation.

“Over 3,000 incidents of pipeline vandalism were recorded between 2010 and 2015. About 643 million litres of petroleum products were lost, amounting to N51.28 billion lost in 2015. Between January and June 2016, 1,600 incidents were recorded, resulting in a loss of 109 million litres of petroleum products and 560,000 barrels of crude oil to refineries. Domestic gas supply to power plants is also affected by about 60 percent, from 1.4 billion standard cubic feet per day to 550 million standard cubic feet per day. About 850 million standard cubic feet per day of gas production has been shut in due to the impact of crisis. Power outage exposure has been between 2,700 megawatts and 3,000 megawatts,” Kachikwu said.

According to the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Kacalla Baru, the fall in oil production had affected the nation’s revenue, as the oil sector accounts for about 90% of the country’s foreign exchange.

This drop in earnings, had affected the funding of the national budget and the major challenge faced by the country at the moment was how to increase the crude capacities to a level that would ensure that the country could deliver on its revenue target.

“We are, therefore, working assiduously to resolve the security issues so that we can guarantee volumes. We cannot, however, deliver volumes without adequate funding of the oil industry. The underfunding has stymied production growth. Therefore, managing this funding issue is our most immediate challenge and transparent innovative financing approaches are being reviewed to address these funding shortfalls. Given the low oil price, sustainable returns need to be maintained,” he added.

Anita Fatunji