Nigeria’s Oil Rig Count Drops 27%, Jeopardizing 2m bpd Output Goal
By Okafor Joseph Afam | December 2, 2024
Nigeria, Africa’s largest oil producer, faces a critical challenge as the number of active oil rigs dropped by 27% year-to-date, raising concerns over the federal government’s goal of achieving a daily crude oil production target of 2 million barrels per day (bpd) by December 2024.
According to the November 2024 Monthly Oil Market Report by the Organisation of Petroleum Exporting Countries (OPEC), functional oil drilling rigs in Nigeria decreased to 11 in October. The report also highlighted a gradual decline in rig activity, with the country averaging 17 rigs in the first and second quarters, and 14 rigs in the third quarter of the year.
An oil rig, or platform, serves as a crucial infrastructure for extracting and processing petroleum and natural gas from deep beneath the earth’s surface. The rig count is a barometer of exploration and production activity, signaling the sector’s vitality and its capacity to attract foreign investments.
However, Nigeria’s oil and gas sector appears to be losing its appeal. “Nigeria, a previously bright spot on big oil and gas investors’ radar screens, has dimmed significantly as investor attention is increasingly drawn to new and emerging developments in Namibia, Ivory Coast, Angola, and the Republic of Congo,” NJ Ayuk, Executive Chairperson of the African Energy Chamber, remarked.
The sector’s waning allure is reflected in stark financial data. The National Bureau of Statistics (NBS) revealed a dramatic decline in foreign capital investments in the petroleum industry, from $720 million in 2016 to a mere $3.64 million by 2023. Notably, the industry received no capital investment from the $3.38 billion imported into Nigeria during the first quarter of 2024.
This downward trend threatens the economy, which relies on oil for over two-thirds of its revenue. Ayuk emphasized, “Investor flight is a serious problem for Nigeria.”
The federal government’s aspiration to boost production faces headwinds, including operational inefficiencies, aging infrastructure, and global competition for investment. Reversing this trend will require bold reforms to restore investor confidence and ensure the nation capitalizes on its vast hydrocarbon resources.
As the December 2024 production target looms, Nigeria’s policymakers must urgently address these challenges to safeguard its position as a leading oil producer and bolster its economy.
