President Bola Tinubu‘s 2024 budget proposal, which anticipates crude oil production of 2.06 million barrels per day (bpd), has been met with scepticism from industry experts who consider the target overly ambitious given Nigeria’s current production challenges.
As of May 2024, Nigeria’s crude oil output had declined to approximately 1.25 million bpd, marking one of the lowest levels in recent years. This downturn has been attributed to factors such as inadequate infrastructure, vandalism, and security concerns.
Ayodeji Dawodu, Director of Fixed Income at BancTrust & Co. Investment Bank, expressed doubts about the feasibility of the budget’s oil production and pricing projections, labelling them as unrealistic.
Similarly, Johnson Chukwu, CEO of Cowry Asset Management Limited, described the budget’s assumptions as overly optimistic. He highlighted the improbability of achieving the projected 2.06 million bpd, considering the nation’s current production constraints.
The budget also sets an oil price benchmark of $75 per barrel. However, analysts caution that global market dynamics, including potential disruptions and fluctuating demand, could render this estimate unreliable.
In light of these concerns, experts recommend that the government adopt more realistic projections and implement strategies to address the underlying issues affecting oil production. Enhancing infrastructure, improving security, and fostering a conducive environment for investment are deemed essential steps to achieve sustainable growth in the oil sector.