NNPC records decline in oil, gas output in July as disruptions hit operations

The Nigerian National Petroleum Company Limited (NNPCL) reported a notable decrease in both crude oil and natural gas production for July, marking a continuation of challenges faced by the nation's energy sector. According to the company’s latest monthly report, crude oil output dropped to 1.68 million barrels per day (mbpd) in July, compared to 1.72 mbpd in June, a 2.3 percent decline. Crude oil production alone fell to 1.44 mbpd from 1.47 mbpd, while condensate output decreased slightly to 0.24 mbpd from 0.25 mbpd. Natural gas production also saw a downturn, declining from 7,841 million standard cubic feet per day (mmscf/d) in June to 7,489 mmscf/d in July, a 4.5 percent reduction. Gas sales followed a similar trend, dropping by approximately 7.8 percent to 4,581 mmscf/d from 4,970 mmscf/d in June. The decline in production was attributed to multiple operational issues affecting the company’s assets. These included facility outages, equipment unavailability, pipeline incidents, and general production constraints. The report noted that these disruptions impacted the overall performance of the company, even as NNPC continued its efforts to enhance output and maintain operational efficiency. Despite the setbacks, certain infrastructure projects showed progress, such as the Obiafu-Obrikom-Oben (OB3) gas pipeline, which achieved 100 percent availability. Meanwhile, the Ajaokuta-Kaduna-Kano (AKK) pipeline operated at 95 percent capacity, with construction nearing completion. NNPC indicated that early gas delivery to Abuja via the AKK pipeline was anticipated by 2026, while the OB3 pipeline was expected to start delivering gas in August 2026 following the completion of pre-commissioning activities. Financial results for July reflected the impact of reduced production. NNPC recorded total revenue of ₦3.087 trillion, down significantly from ₦4.389 trillion in June. Profit after tax also declined, reaching ₦279 billion compared to ₦535 billion in the previous month. Statutory payments made by the company from January to July totaled ₦7.913 trillion. While some areas showed positive signs, the availability of petroleum products at NNPC retail stations remained low, with only 52 percent of stations reporting sufficient supply during the month. This shortage highlighted ongoing logistical and distribution challenges within the country’s fuel network. In response to these challenges, NNPC outlined a strategic approach aimed at improving production levels. The company emphasized the importance of maintaining high facility uptime through rigorous preventive maintenance practices. It also focused on minimizing unplanned downtime and optimizing export operations to ensure consistent output. Additionally, NNPC expressed interest in exploring new opportunities for incremental production, suggesting a long-term vision for enhancing the country’s energy output. The situation underscores broader concerns regarding the stability of Nigeria’s oil and gas industry. With production levels fluctuating due to technical and infrastructural limitations, the government and private sector face mounting pressure to address these issues. The recent decline in output comes amid ongoing discussions about the need for investment in critical infrastructure and improved regulatory frameworks to support sustainable growth. As NNPC continues to navigate these challenges, the success of upcoming projects like the AKK and OB3 pipelines will play a crucial role in determining the future trajectory of the nation’s energy sector.