According to the Organization of Petroleum Exporting Countries (OPEC), Nigeria’s crude oil production decreased in July to an average of 1.08 million barrels per day (mbpd) from 1.16 mbpd in the previous month, suggesting a decrease of 6.42 percent. Nigeria has consistently failed to meet the monthly production quota set by OPEC and the budgeted production level of 1.6 mbpd. Despite the high crude oil prices in the global market, which ought to increase export earnings and the availability of foreign currency, Nigeria’s output has continued to dip. The government has cited issues such as ageing infrastructure, the exit of major oil firms, and insecurity leading to oil theft for the low production. With more than a quarter of the 2022 revenues expected to come from the oil sector, the below-budgeted oil production suggests that the actual government revenue is likely to shortfall the amount projected and government might resolve to borrow to finance the planned expenditure or cut down expenditure. There is a need for the government to explore non-oil revenue sources to cover the shortfall in oil revenues. Also, with the full endorsement of the Petroleum Industrial Act (PIA), which led to the Nigerian National Petroleum Company Limited (NNPC Ltd.) creation in July, the expectation is that these new changes would foster efficiency in the oil industry. Specifically, the creation of NNPC limited should increase investment inflows in the sector that would expand crude oil production. As a private sector-oriented organisation, the NNPC limited needs to introduce incentive mechanisms that would strengthen the security of oil equipment. Improved security and investment inflows should boost production levels and help attain the OPEC production quota.
