President Bola Tinubu has pledged to raise Nigeria’s crude oil production from less than 1.5 million barrels per day to above 2 million bpd in 2025.
Experts who are vast in Nigeria’s Oil and Gas industry say it is achievable but warn that a toxic mix of factors including poor investment in the upstream sector, poor infrastructure, crude oil theft, and corruption, among others, may derail this target and render it a mirage.
Petroleum Engineer and Oil and Gas Analyst, Dr Bala Zakka argued that Nigeria has the potential to increase its crude oil output, but achieving such a feat in 2025 is illusory, taking into account the persistent crude oil theft in the Niger Delta and the exodus on International Oil Companies (IOCs) from onstream exploration in the region.
Speaking on the Federal Government’s oil production target in an interview with Nairametrics, Dr Zakka said: “This year, No!. But generally, Nigeria has what it takes to boast the production of crude oil and gas. Nigeria has basins with crude oil in drilling quantities. We have the Delta Basin, we have the Dahomey Basin, we have the Benue Gulf, we have the Anambra Basin, we have the Lake Chad Basin, we have the Gongola Basin. All those basins have been assessed and have been found to have fossil fuel in drilling quantities.”
The exodus of International Oil Companies from onshore operations in Nigeria poses a threat to meeting the target this year. While the assets of the IOCs were taken up by indigenous companies in new upstream investment deals, Dr Zakka argued that the new investments may not have the desired results until towards the end of the year or the next, as some of the assets had been abandoned before their sales.
He noted that many companies in the upstream sector have suspended exploration, and may not resume until 2026.
“The Bongo North investment you talked about. They will not start drilling until 2026 or even later. Most of these companies have stopped drilling because of the many challenges in the upstream sector. Some have even left,” he said.
Eche Idoko, the spokesperson of the Crude Oil Refiners Association of Nigeria (CORAN), corroborated Zakka as he also lamented about the drop in investment and production in the upstream sector, which had an effect on the crude supply for local refiners in the concluded year.
“There’s also been a reduction in investment and in production. With the whole conversation around energy transition happening in the West, and then we see a lot of divestment by the IOCs. We have seen a drastic reduction in production and investment in production, which is a problem,” he said in an exclusive chat with Nairametrics.
Crude oil theft
Crude oil theft is a menace that has stifled growth in Nigeria’s oil and gas industry for decades. It has cost the country billions of dollars in revenue and massive environmental damage in the Niger Delta region.
- Last year, the Executive Secretary of the Nigerian Extractive Industries Transparency Initiative (NEITI), Dr. Ogbonnaya Orji, revealed that Nigeria lost 619.7 million barrels of crude oil valued at N16.25 trillion to theft between 2009 and 2020.
- The Speaker of the House of Representatives, Abbas Tajudeen, said that Nigeria lost about 10 billion dollars in revenue to crude oil theft between January and July 2024.
“At a time, we were doing 2 million barrels per day, now, we can barely do 1.5. So there has been a drop, and it is a result of a lot of factors. But chief among them is the insecurity around the pipelines,” Idoko noted.
Corruption
While crude oil theft seems to be the major issue affecting the industry, experts say powerful individuals with access to power perpetuate most of the theft.
- Dr Zakka noted that “when you look at the volume of crude theft, you will know that it is not petty thieves who are behind it, it is a well-crafted and well-syndicated criminality.”
- Professor Yemi Oke, who specialises in Energy Law shares the same sentiment. “There is official and unofficial crude oil production. Official production is the one that is recorded, unofficial is the one that is diverted through official stealing, diversion, bunkering and vandalism,” he said in a chat with Nairametrics.
- Professor Oke compared Nigeria’s stolen crude oil to ‘blood diamond’ in the Congo which used to be sold in the international market and the proceeds were used to fund wars and killings in Congo until the international community intervened through what is called the Kimberly Certification Process.
He noted that crude oil stolen from Nigeria is sold in the international market and it may be hard to stop “when there is a market ready for it.” He asserted that powerful Nigerians were involved in the theft.
Increasing oil output is achievable for Nigeria
However, Prof Oke expressed optimism in Nigeria’s ability to increase oil production “even before the end of the year”, “but that will depend on what we are able to do in terms of political will and resilience as a country.”
He noted that President Bola Tinubu’s administration is making progress in the war on oil theft, and the administration has also demonstrated the political will to boost the country’s oil output.
He also urged the international community to assist Nigeria in the fight against oil theft by not allowing stolen oil in the international market. “Just like the issue of blood diamonds in Congo was addressed with the help of the international community.”
Back story
The President benchmarked the 2025 budget and the 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) on daily production of $2.06 and a global price of $75 per barrel.
Nigeria’s oil production grew slightly last year, according to data from the Organisation of Oil Producing Countries (OPEC) and the Nigeria Upstream Petroleum Regulatory Commission (NUPRC). However, the country’s output is still below its OPEC quota of 1.5 million bpd.
OPEC confirms Nigeria increased output but is still below quota
- The Monthly report of the International Oil Cartel confirmed that Nigeria increased its crude oil output from a daily average of 1.3 million bpd in 2023 to an average of 1.4 million barrels in 2024.
- Recall that in October 2024, the Nigerian National Petroleum Company Limited (NNPCL) claimed that it had increased Nigeria’s oil production to an average of 1.8 million barrels per day.
- The claim was made by the NNPC Group Chief Executive Officer Mele Kyari, who credited the country’s Production War Room for the growth.
- However, data from both OPEC and NUPRC disproved this. According to NUPRC, the 1.8 million barrel was a peak production achieved in one day and it includes condensates. OPEC does not take account of condensates in the calculation of production.
According to the NUPRC Crude oil production report, below is a breakdown of Nigeria’s average daily crude oil production excluding condensates:
- January – 1,426,574
- February – 1,322,208
- March – 1,230,518
- April – 1,281,478
- May – 1,251,494
- June – 1,276,159
- July – 1,306,657
- August – 1,351,689
- September – 1,324,293
- October – 1,333,322
- November – 1,485,656
- December – 1,484,585
In OPEC’s data, Nigeria’s daily average crude oil production was 1.35 million bpd in Q2 2024, 1.4 million in Q3 and 1.46 million in Q4. The OPEC report noted that this is based on secondary sources.
