Nigeria’s crude oil production hit a significant milestone in November 2024, reaching 1.485 million barrels per day (bpd), a volume just shy of its Organisation of Petroleum Exporting Countries (OPEC) target of 1.5 million bpd. This marked the highest output for the country so far this year, reflecting ongoing efforts to revive production levels after years of shortfalls.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirmed the achievement, with data aligning with OPEC’s Monthly Oil Market Report (MOMR). The report highlighted a steady increase in crude oil production, excluding condensates, signalling progress in the country’s oil sector.
Nigeria’s Monthly Crude Production in 2024
In January, Nigeria’s production stood at 1.42 million bpd, previously the year’s highest. Subsequent months saw fluctuations:
- February: 1.32 million bpd
- March: 1.23 million bpd
- April: 1.28 million bpd
- May: 1.25 million bpd
- June: 1.27 million bpd
The second half of the year showed a gradual rebound:
- July: 1.3 million bpd
- August: 1.35 million bpd
- September: 1.32 million bpd
- October: 1.33 million bpd
- November: 1.485 million bpd
When condensates light hydrocarbons not included in OPEC quotas are added, Nigeria’s oil production in November rose by nearly 10% to 1.69 million bpd, up from 1.538 million bpd in October.
Challenges in Meeting OPEC Quota
Nigeria’s struggle to meet its OPEC allocation dates back to the second quarter of 2020. Key issues include:
- Oil theft and pipeline vandalism: Widespread illegal siphoning of crude in the Niger Delta has drastically reduced output.
- Sabotage and ageing infrastructure: Many of the pipelines and facilities require significant upgrades.
- Reduced investments: International oil companies have cut back due to global energy transition pressures and uncertainties in Nigeria’s regulatory environment.
The persistent shortfalls led OPEC to reduce Nigeria’s quota from its earlier level of 1.8 million bpd.
November’s Production Compared to Budget Projections
Despite the marked improvement, November’s production still fell short of the federal government’s benchmark of 1.78 million bpd set for the 2024 budget. Condensates production also declined marginally, recording 204,828 bpd in November compared to 204,806 bpd in October.
Global Oil Market Outlook
Meanwhile, OPEC revised its oil demand growth forecasts for 2024, marking the fifth consecutive cut this year. The organisation reduced its 2024 demand projection by 210,000 bpd, predicting a growth of 1.6 million bpd. This represents a 27% downgrade since July as market conditions weaken, particularly in major economies like China.
OPEC+ a coalition of OPEC members and allied producers like Russia has been withholding crude production since 2022 to stabilise prices and prevent a surplus. Last week, the group extended production cuts further, delaying plans to restart halted output until April 2024.
Oil Prices Under Pressure
Global oil prices have dropped significantly, with Brent crude trading near $73 per barrel, a 17% decline since July. This poses economic challenges for oil-dependent countries, including Nigeria, as revenues shrink below government expenditure needs.
OPEC’s Diverging Projections
OPEC’s forecasts for 2024 oil demand remain higher than other industry projections. The alliance predicts global consumption to average 103.82 million bpd this year, but doubts linger over its long-term outlook.
Analysts, including those from Morgan Stanley and Goldman Sachs, have more conservative estimates, aligning with data from the International Energy Agency (IEA). Even Saudi Aramco, Saudi Arabia’s state oil giant, has issued lower forecasts than OPEC.
Nigeria’s Path Forward
To sustain and improve production levels, Nigeria must address systemic challenges, including curbing oil theft, incentivising investments, and upgrading critical infrastructure. The recently implemented Petroleum Industry Act (PIA) and policies like the “Drill or Drop” initiative provide frameworks to bolster exploration and output.
As Nigeria edges closer to meeting its OPEC quota, restoring investor confidence and ensuring transparency in the oil sector will be pivotal for long-term success.