As Nigeria’s crude output bounces back following years of decline, the country is getting ready to convince the Organization of Petroleum Exporting Countries (OPEC) to increase its oil production quota.
Before officially asking OPEC for a quota revision, the nation is focusing on increasing production to satisfy budgetary targets, according to Gbenga Komolafe, chief executive of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC).
“Nigeria will work with OPEC to increase the country’s quota after it has finished increasing production to meet its budget aspirations,” Komolafe said.
In December 2024, Nigeria produced 1.48 million barrels per day (bpd) of crude oil, which was barely under than the 1.5 million bpd OPEC limit.
From a low of 1.1 million barrels per day in 2022, when massive theft and vandalism severely damaged the nation’s oil infrastructure, this represents a dramatic rebound.
The government predicts that production will exceed two million barrels per day, the highest level in ten years, thanks in large part to efforts to bolster security and draw in investors.
Key infrastructure, such as the Trans-Niger Pipeline, was illegally tapped in more than 150 locations in 2022 due to theft and sabotage. Only a small portion of the oil that was moved through the system was given to producers.
Since then, the Nigerian National Petroleum Company (NNPC) has taken steps to solve these issues, such as setting up a command center for real-time production monitoring and involving local communities in pipeline protection efforts.
“These actions are beginning to pay off, but at a high price,” stated Ifeanyi Onyegiri, a senior analyst at Welligence. According to analysts, Nigeria would be able to negotiate a larger quota with OPEC if it can maintain current gains.
Experts caution that despite the advancements, securing the extensive network of pipelines in the Niger Delta is still very difficult. According to Rystad Energy analyst Pranav Joshi, “the main bottleneck is whether the vandalism issue can be fixed in a sustained way.”
The recovery has also been significantly aided by domestic oil businesses.
Nigerian-owned companies like Oando and Seplat Energy have made more investments; after acquiring ExxonMobil’s onshore assets, Seplat plans to more than double its output to 120,000 barrels per day.
In the upcoming years, Oando also intends to increase its output to 100,000 bpd.Drilling activity has tripled over the last four years, according to Komolafe, indicating a resurgence of trust in the industry.
Nigeria’s aggressive aspirations to exceed 2 million barrels per day, however, would put it in conflict with OPEC, which has aimed to impose production caps in order to stabilize world oil prices.
According to Dipo Ogunbiyi, an energy analyst at Renaissance Capital Africa, “Nigeria’s current fiscal situation provides strong incentives to exceed its OPEC limit, as incremental revenue directly impacts the budget deficit.”
In 2024, the United Arab Emirates successfully negotiated a higher quota, citing increased production capacity, while Angola left the cartel in 2023 after rejecting stricter output restrictions.
Given Nigeria’s fiscal constraints and urgent need for revenue, analysts suggest the country may prioritize increased production over strict adherence to OPEC quotas.