From the figures published on Nigeria’s GDP by the Nigeria Bureau of Statistics, the oil sector was estimated to have averaged at 1.84 million barrels per day, which is 0.15 million barrels higher than the daily average production recorded in the first quarter of June.
That rate of production – the highest since Nigeria dropped from above 2 million barrels per day after the first quarter of 2016 – was largely responsible for the rebound of the economy away from recession.
For the past fifty years, oil has been the main stay of the Nigerian economy and even as the prices have continued to decline as other nations diversify their energy sources, Nigeria’s dependence on the oil sector remains as strong.
Vandalism and sabotage in the Niger Delta have, in the past two years, significantly hampered the production capacity of the country. The improvement made in the last quarter may be attributable to the efforts of the Executive, led by Vice President Yemi Osinbajo, to engage the oil producing communities in the Niger Delta.
Even with much lower prices now compared to about two years ago, an increase in production of 150,000 barrels per day has been enough to tilt the nation away from recession.
More recently, there have been threats about a resumption of hostilities on the nation’s oil facilities, after some groups declared to shut down production on October 1. It is believed that those threats have been withdrawn, hence, the country can expect to sustain the progress made from the previous quarter over the third quarter of the year.
However, it will be interesting to see how the Government rallies the non-oil sector to boost its contribution to the GDP. While the oil sector improved both on a year-on-year basis and from the first quarter, the non-oil sector did not show the same level of GDP growth.
The reinvigoration of the US shale industry and renewed pressure on prices have posed challenges to the oil cartel, OPEC, to which Nigeria belongs. Nigeria and Libya were exempt from supply cut deals agreed by the body in January, enabling it to boost production, and the agreement was extended in May for another nine months.
But planning for the future, it would be in the best interest to start putting strategic policies in place to position the country for resilience in the face of further falls in the demands and prices of oil.