Nigeria Boosts Oil Output Near OPEC Quota as Security Improves

AFRICAN BUSINESS AND ECONOMYJanuary 23, 2025 at 8:33 PM UTC

TLDR

Nigeria, Africa’s largest crude producer, has increased oil production to 1.48 million barrels per day (b/d) in December 2024
The recovery marks a significant rebound from a 2022 low of 1.1 million b/d, driven by improved security measures and investments
The government aims to reach 2 million b/d, a level last achieved a decade ago, though analysts expect a more modest increase

Nigeria, Africa’s largest crude producer, has increased oil production to 1.48 million barrels per day (b/d) in December 2024, nearing its OPEC+ quota of 1.5 million b/d. The recovery marks a significant rebound from a 2022 low of 1.1 million b/d, driven by improved security measures and investments.

The government aims to reach 2 million b/d, a level last achieved a decade ago, though analysts expect a more modest increase. Forecasts from Welligence and Renaissance Capital range between 1.5 and 1.85 million b/d for 2025.

Key contributors to the recovery include better monitoring systems and reduced pipeline vandalism in the Niger Delta. Local companies like Seplat Energy and Oando Plc are driving growth, benefiting from asset sales by global majors like Exxon Mobil and Equinor.

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Key Takeaways

Nigeria faces a dilemma: balancing fiscal needs with OPEC+ production limits. Higher output could address budget deficits but risks breaching its quota, potentially straining relations with the cartel. Angola’s 2023 exit from OPEC over similar issues raises questions about Nigeria’s path forward. Investments by local producers and enhanced security measures have unlocked production potential. However, sustaining gains hinges on curbing vandalism, as doubts remain about long-term security effectiveness in the Niger Delta. With global oil prices hovering above $70 a barrel, Nigeria may prioritize fiscal stability over strict OPEC compliance. Efforts to renegotiate its quota will depend on the government’s ability to prove sustained production growth.

Nigeria

Economy

Oil

Energy

Oil & Gas

OPEC

Commodities