Nigeria's crude oil output in July 2024 rose slightly above 1.3 million barrels per day, up from June's output of 1.28 million. However, this still falls short of the 1.5 million bpd OPEC quota and far below Nigeria's 1.78 million barrels per day budget target for 2024. Lack of infrastructure and expertise, oil theft, and low investments continue to cripple output.
Related story: Nigeria Is Turning Into an Oil Market Juggernaut
The government also wants to develop key components of the cotton value chain. Presently, Nigeria imports close to 90 percent of its textile products. This new initiative aims to change that.
The Nigerian army said on Wednesday that it had destroyed at least 27 illicit oil refineries and seized around 100,000 liters (26,400 gallons) of stolen crude oil in a series of raids in the Niger river delta this week.
In a statement, the army said its troops destroyed 23 illegal sites along the Imo River in southeast Nigeria. It described the region as "a renowned hub of criminal activities."
Elsewhere, soldiers from the 16th brigade neutralized four illegal refineries in the Degema region near Port Harcourt.
Army spokesman Danjuma Jonah Danjuma said that, along with the crude oil itself, vehicles, storage tanks and metal drums were also confiscated.
"The confiscated products are being handled appropriately," the lieutenant colonel said, according to Nigeria's Daily Post newspaper.
Major General Jamal Abdussalam, commanding officer of the sixth division, commended his troops for their "renewed disposition to take criminal merchants out of business" and ordered them to "ensure the integrity of the pipelines [is] maintained."
He also called on local community stakeholders to continue to provide information on criminal activities to the security agencies.
Nigeria's economy hit by drop in oil supply
Nigeria is Africa's leading energy producer but large-scale oil theft and pipeline sabotage have decreased output in recent years — reducing exports, crippling government finances and posing a serious challenge for President Bola Tinubu.
Just last week, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said it had only been able to help secure 177,777 barrels per day (bpd) from oil producers in the first six months of the year, despite refineries raising their requirements for the second half of 2024 to 597,700 bpd.
Meanwhile, lawmakers in Lagos are considering new, stricter punishments for "subversive actions" which critics say are aimed at anti-government protesters. However, the proposed regulation could feasibly by applied to oil smugglers, too.
On Wednesday, parliamentarians began debating a Counter Subversion Bill which proposes three-year jail terms for "disobeying constituted authority," five years for erecting "illegal road blocks" and up to ten years for refusal to sing the national anthem.
The new bill comes as a response to nationwide protests against economic reforms which have exacerbated a cost-of-living crisis in Nigeria.
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The move marks an escalation in a year-long crackdown on crypto use since Nigeria’s central bank alleged in February that crypto platforms enabled money flows through the country from unidentifiable sources.
In a Tuesday briefing to a government council chaired by President Bola Tinubu, National Security Adviser Nuhu Ribadu said his office initiated action to freeze $38 million held as crypto in digital wallets. The accounts allegedly received donations in support of nationwide cost of living protests that were held at the beginning of this month, local media outlets reported.
A separate report by Premium Times detailed screengrabs of what it purports to be a court order in Nigeria’s capital Abuja authorizing EFCC, Nigeria’s financial crimes investigator, to freeze four wallets holding about 37 million USDT, a stablecoin valued at par with the dollar. The wallets “are owned by individuals being investigated for offences of Money Laundering and Terrorism Financing,” the EFCC said according to the purported court order.
It is not clear when the agency began its investigation of the wallets’ owners. The order to freeze did not specify a connection to the protests and was granted on Aug. 9, the protests’ penultimate day. An EFCC spokesperson did not immediately respond to requests for comment by Semafor Africa.
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Nigeria’s crackdown has included shutting off user access to crypto websites and trading platforms, and the arrest of staffers of Binance, one of the world’s largest crypto companies. Authorities have said crypto trading fueled a sharp weakening of the naira currency earlier this year.
Some doubt has been raised as to the content of the crypto wallets targeted by Nigerian authorities.
Two reports on Wednesday argued that two of the wallets contained less crypto than the EFCC’s court order stipulated and that they remained active, while a third wallet was non-existent. KuCoin, a crypto trading exchange that suspended its peer-to-peer service in Nigeria in May and reported by technology publication Techpoint as the owner of one of the four wallets, could not be reached for comment.
Alexander’s view
Nigeria’s latest action against crypto holders is not surprising given the government’s tone all year, but its overlap with cost of living protests suggests a broader security anxiety within government circles.
Despite veiled threats by the army and police to discourage the protests, residents across the country marched earlier this month against the soaring prices of food and other essentials. The protests did not quite last for the scheduled 10-day period as intensity faded after the first few days. Security forces used tear gas and live ammunition on protesters. At least six people were reportedly killed on the first day of demonstrations.
The specter of Russian flags being flown in northern states, where incidents of looting of stores were also attributed to protesters, appears to have evoked a determination to identify and punish leading actors of the protests. Targeting funding sources is one way to do so, as the authorities did in 2020 during protests against police brutality known as #EndSARS.
By Alexander Onukwue, Semafor
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In a finely balanced oil market, Nigeria has suddenly reemerged as a key player.
During the past few weeks, actions by the country’s massive Dangote refinery have moved prices, with purchases of US barrels initially boosting the crude futures curve before a decision to sell them sent oil tumbling.
Once fully operational, the plant outside Lagos will be able to process 650,000 barrels a day, rivaling the largest sites in the US and more than 50% larger than Europe’s biggest refinery.
A look at International Energy Agency data this week shows why that’s so important.
Even if OPEC+ cancels planned supply hikes, there will be a surplus of about 860,000 barrels a day next year. The group currently plans to add 540,000 barrels a day next quarter.
Both figures are close to Dangote-sized swings.
Refinery ramp-ups are complicated, and there’s already been at least one delay. But once the site starts churning out gasoline, it will transform fuel markets in the region and upend long-established trade flows, particularly in Europe, where Nigeria currently purchases much of its supplies.
Aliko Dangote, the billionaire behind the plant, said last month the plan is for it to start producing the fuel in August, though others are doubtful.
“The refinery’s gasoline is unlikely to hit the market until at least September,” consultant FGE wrote this month, citing issues with some of the plant’s units.
Then there’s the question of feedstock.
The facility was built on a dream of Nigeria consuming its own crude. That’s why there was an uproar when Dangote started buying US supplies.
Recently, the country announced plans for its refiners to pay for oil in local currency and to consume as many as 445,000 barrels a day of domestic product. Still, it’s unclear how the latter will happen.
But if it does, that will mean less crude for current buyers, notably in Europe.
It also means that in an oil market focused on war, economic slowdowns and output curbs, Nigeria will be a surprisingly hot topic among traders in coming months.
Alex Longley and Bill Lehane, Bloomberg
