Nigeria’s 2m bpd crude target at odds with OPEC quota, risks penalties – Rewane

Bismarck Rewane, economist and Managing Director of Financial Derivatives Company Limited,  has cautioned that Nigeria’s ambition to increase crude oil production to 2 million barrels per day (bpd) by the end of 2025 is inconsistent with its OPEC quota and could jeopardize the country’s standing within the oil cartel.

Nigeria’s official OPEC production cap stands at 1.5 million bpd, yet the Federal Government set a 2 million bpd target in the 2025 budget. Speaking at the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) Energy and Labour Summit (PEALS) in Abuja on Wednesday, Minister of State for Petroleum (Oil), Heineken Lokpobiri, revealed that output has climbed to 1.8 million bpd, an 80 percent increase over the last three years.

Lokpobiri expressed optimism that production will hit 2 million bpd before year-end, even as he acknowledged OPEC queries over Nigeria’s marginal breach of its quota. He clarified that the excess output largely involved condensates, which OPEC does not regulate.

“We remain a committed member of OPEC, but we also have an obligation to increase production to meet domestic, regional, and global demand,” Lokpobiri said.

Reacting to the minister’s statement on an interview on Channels TV on Thursday, Rewane stressed that publicly setting a 2 million bpd target without OPEC’s approval sends a negative signal and could attract sanctions.

“Nigeria has a quota of 1.5 million barrels per day, and we have exceeded that quota in the last two months by about one or two thousand barrels. But cumulatively over the last 12 months, we have underproduced. If we were to plough back the past shortfall, we still have millions of barrels in balance, which would make us compliant,” he said.

Rewane warned that aspirations conflicting with OPEC commitments undermine Nigeria’s credibility and threaten global oil price stability:

“When you look at the government’s aspiration to produce up to 2 million bpd, that is a complete negation of our OPEC commitment. Without OPEC or OPEC+, oil prices could crash to $20 or $30 per barrel, which would hurt everyone. So compliance is critical.”

He noted that quota compliance is not cumulative but period-specific: “In OPEC agreements, once you miss the quota, you’ve missed it and must comply going forward.”

On whether Nigeria can lobby for an increased production quota, Rewane said the government should first engage OPEC diplomatically before making public pronouncements:

“We have some leverage because Nigeria is one of the most vulnerable members. Our economy is fragile, and our per capita income is low. We need to convince OPEC members that our needs are significant. They may grant some leeway, but this must be secured before announcing a 2 million bpd aspiration,” he advised.

He warned against careless statements that could put Nigeria in default: “By declaring this target, you’re already signaling non-compliance, which carries penalties. If we intend to default, then we might as well leave OPEC,  but that’s not in our best interest. What we need is better coordination and diplomacy.”