Nigeria, Africa’s top oil-producing nation, has recorded a remarkable milestone by surpassing the 1.5 million barrels per day (bpd) crude oil production threshold—a feat last achieved four years ago. This milestone aligns with its December 2024 quota set by the Organisation of Petroleum Exporting Countries (OPEC) and underscores progress in revitalizing the sector plagued by challenges.
According to Bloomberg’s tanker tracking data, Nigeria’s output climbed by 40,000 bpd to reach 1.51 million bpd. The figures underscore a significant leap from the 2023 production average of 1.3 million bpd. Despite the strides, the 2024 production still trails the nation’s budgeted expectation of 2 million bpd, leaving a 500,000-barrel deficit.
Policy and Security Measures Drive Growth
Nigeria’s Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, attributed the production surge to deliberate government actions. “Upon assumption of office, President Bola Tinubu directed the revitalization of the oil sector, particularly crude production. This directive laid the foundation for our success,” he stated in a post on his official X account.
Lokpobiri also highlighted that the administration’s efforts fostered stability in oil-producing regions, especially in the Niger Delta. Collaborative peace initiatives aimed at resolving conflicts and curbing illegal oil activities played a pivotal role in restoring production. Enhanced security strategies, particularly to address oil theft and pipeline vandalism, were instrumental in boosting output.
The Nigerian National Petroleum Company (NNPC) Limited reinforced the government’s efforts. It reported reaching 1.8 million bpd in October, although questions remain about whether this figure includes condensates, which are excluded from global crude sales.
Tinubu Administration’s Policy Pillars
The uptick in crude production underscores the broader policy focus of Tinubu’s government. With oil earnings being a major revenue source, the administration prioritized improving crude production and attracting foreign investments. Within the first 18 months, Tinubu’s presidency achieved significant strides, fostering confidence among investors and stakeholders in Nigeria’s oil sector.
Further reforms include the diversification of revenue streams to cushion oil revenue shortfalls. In response to unmet production targets, the government intensified tax collection and customs enforcement to sustain national budgets.
Regional Context: Nigeria Shines Amid OPEC Changes
Nigeria’s achievement contrasts with declining outputs among other OPEC members. In December, the United Arab Emirates (UAE) implemented significant strategic cuts, scaling back exports to stabilize global prices. Bloomberg data revealed that UAE oil exports dropped to an 18-month low, and its state-owned oil firm ADNOC reduced cargo allocations to Asian buyers.
Meanwhile, Iran and Libya, key regional producers, recorded mixed outcomes. While Libya boosted production by 40,000 bpd to reach 1.23 million bpd, reflecting political stability, Iran’s production declined by the same amount to settle at 3.32 million bpd. Despite setbacks, Iran’s output remains at a six-year high.
The fluctuation in global production highlights Nigeria’s unique progress amid challenging market conditions. Analysts credit Nigeria’s consistent policies and commitment to addressing security and operational challenges for this rebound.
Historical and Global Significance
Nigeria’s crude oil industry had been marred by production hurdles, including theft, aging infrastructure, and underinvestment. Between 2019 and 2022, production plummeted, falling below the OPEC-assigned quotas. By 2023, output struggled to exceed 1.3 million bpd, undermining the country’s revenue projections.
Historically, crude oil accounts for over 80% of Nigeria’s foreign exchange earnings. The sector’s underperformance during the past decade exacerbated fiscal deficits, forcing Nigeria to seek international loans and rely on non-oil revenue sources.
However, with December’s production crossing the 1.5 million bpd mark, experts say the long-term outlook is positive. “This is not just about numbers; it is a significant morale booster for a country whose economy hinges on crude production,” energy analyst Temidayo Adebayo observed.
Challenges Remain
Despite the optimistic developments, challenges linger. Nigeria’s production remains well below its capacity and projected budget figures. The nation’s underperformance costs it hundreds of millions in potential revenue, straining public finances.
Global market volatility further complicates Nigeria’s oil ambitions. With countries like the UAE and Saudi Arabia adopting production cuts to stabilize prices, oil-exporting nations, including Nigeria, must navigate delicate supply-demand dynamics.
Moreover, uncertainty looms over the sustainability of Nigeria’s recent gains. Analysts caution that sustaining high output will require continuous investment in infrastructure, enhanced security in oil regions, and transparency in operations.
