Business
Succor for economy over new crude output of 1.8mbpd

…as FG plans ambitious N48trn 2025 budget estimates • It is too aggressive, unrealistic – Experts
Nigeria’s flailing economy has received a major boost with a massive increase in its daily crude oil and gas productions, sparking celebrations within the government, Business Hallmark can report.
According to reports, Nigeria is heading for near-record oil export revenue in 2024, thanks to oil output rising from 1.25 million barrels per day in June to 1.808 mbpd in November.
Announcing the good news at a briefing on the nation’s crude oil and gas production on Thursday, November 14, the Head, the Production War Room Office, Nigerian National Petroleum Corporation Limited (NNPCL), Lawal Musa, said Nigeria’s crude oil and natural gas production reached 1.8 million barrels per day (bpd) and 7.4 billion standard cubic feet per day (bscfd) on November 11.
Musa, who doubles as a senior business advisor to NNPCL’s Group Chief Executive Officer, Mele Kyari, attributed the appreciable rise in oil output to the partnership between the leadership of the company, stakeholders, and security agencies, who oversaw the dislodgement of pipeline vandals and crude oil thieves.
Nigeria had struggled to meet the monthly production quota allocated to it by the Organisation of Petroleum Exporting Countries (OPEC) over its inability to meet previously allocated quotas.
For instance, Nigeria recorded a low of 900,000 bpd in 2022, forcing OPEC to cut the nation’s quota from N1.8m bpd to 1.685 million bpd in December 2018, and further down to 1.58 million barrels per day at its ministerial meeting on November 30, 2023.
Rising from another ministerial meeting on Sunday, June 2, 2024, OPEC said Nigeria’s production level of 1.5 million bpd should be sustained from January 1, 2025 to December 31, 2025.
Expectedly, Nigeria’s oil export earnings, its major source of revenue and foreign exchange, have continued to experience a sharp drop, forcing the federal, state, and local governments to resort to borrowings to balance their budgets.
A just released data by the Central Bank of Nigeria (CBN) obtained by BH confirmed that Nigeria’s crude oil export earnings slumped to $12.1 billion in Q2, 2024, down from $12.4 billion in the preceding Q1, 2023.
According to the CBN’s Economic Report, the drop in oil revenues reflects the decline in domestic crude oil production from 1.33 million bpd in Q1, 2024 to 1.27 million barrels per day in Q2, 2024, a production deficit of 308,000 bpd.
The report added that merchandise export earnings declined in Q2, 2024, primarily on account of the fall in crude oil export receipts, following the drop in domestic crude oil production.
The apex bank report said aggregate export earnings declined by 1.76 per cent to $13.94 billion in Q2, 2024, from $14.19 billion in Q1,2024.
Despite earnings from crude oil falling, oil and gas exports continued to dominate, constituting 87.38 per cent, while non-oil exports accounted for the balance.
“Domestic crude oil production declined in Q2, 2024, attributed to persistent oil theft and illegal refining activities in the Niger Delta region. Nigeria’s average crude oil production fell by 4.51 per cent to 1.27 million bpd in Q2, 2024, from 1.33 million bpd in the preceding quarter.
“This was due to crude oil theft and pipeline vandalism in the Niger Delta region, leading to a decline in production from the Forcados, Bonny, Qua-Iboe, Escravos and Brass streams, respectively. Nigeria’s crude oil production level fell short of its OPEC quota of 1.58 million bpd by 308,000 bpd in Q2, 2024”, the report noted.
Despite getting a much lower monthly production quota of 1.58 million barrels per day from OPEC in December 2023, Nigeria has struggled to meet its assigned target, until recently when the new administration declared total war on oil theft and pumped billions of dollars worth of investments into the oil and gas sector.
After a low of 900,000 bpd in 2022, the country has successfully, albeit slowly, raised output.
According to available data, Nigeria’s daily crude oil production (including condensates) was 1.502 million in January 2024, 1.472million in February, 1.501 million in March, 1.420m in April, 1.459m in May, 1.459m in June, 1.526m in July, 1.52m in August, 1.665million in September and 1.808million in October 2024.
With Nigeria now able to produce 1.43million barrels per day (excluding condensates) in October, the latest production figure is just 228,000 barrels shy of OPEC’s 1.58million daily allocation.
Despite the feat, the government is not relenting in its efforts to increase production. Virtually all public officials that spoke on the development, project Nigeria’s daily crude oil production to surpass 2 million barrels by December 2024.
“Today is perhaps my happiest day since I was appointed as Minister of State Petroleum Resources. Why do I say so? We set up a war room, with a view to ramping up production. And the rest of the world is ramping up production. Only Africa is lagging. But Africa is looking for Nigeria’s leadership. Once Nigeria leads, the rest of the continent will follow.
“That was the consensus in Cape Town. And I was very happy to be there. Chairman of the Board said that he is expecting that by December, we’ll achieve 2million bpd. And I’m not going to make any statement as to figures. But I know that you guys can get it done.
“You’ve done it before. And you can do it even better. I’ve always contended that during the COVID, we did 2.5 million barrels. With no additional investments, we did that. I believe that that’s possible.
“As I said earlier, by December, we are expecting a minimum, and I repeat, a minimum of 2million barrels per day . We are still moving steadily towards that 2.5 million barrels, which we have capacity to do”, said Minister of State, Petroleum Resources (Oil), Senator Heineken Lokpobiri.
Our correspondent gathered that members of the nation’s economic management team are hoping production stays up as they continue to tackle challenges from deficit spending.
The oil ang gas sector is Nigeria’s major source of foreign exchange and revenue despite contributing a small fragment of its Gross Domestic Products (GDP).
According to a source in the Federal Ministry of Finance, drop in crude oil production have a direct impact on the country’s fiscal stability.
“No doubt, higher gas and crude oil production levels will enhance revenue. Its significance extends beyond economic metrics. It underpins various government operations.
“It will enable investments in critical areas, such as building critical infrastructures such as roads, health facilities, schools, education, as well as helping to pay workers wages.
“However, an appreciable drop in production and price can lead to revenue deficits, further straining an already fragile economy, as witnessed in recent years”, the source stated.
While the Federal Government had fixed a benchmark of 1.7 million bpd and $77 per barrel for the 2024 budget, BH projects that the 2024 and 2025 budget estimates will likely be met if the trend (current production output and price) is sustained.
Excess output
Based on BH analysis, Nigeria is now producing about 108,000 barrels more than its 2024 budget target of 1.7 million bpd with the current production level currently standing at 1.8 million oil barrels per day.
Also, despite crude oil prices crashing in the international market to $74 and $76 on average for WTI and Brent, Nigeria’s premium oil grades, namely Bonny Light, Qua Iboe, Nembe, Brass River and Agbami have largely held their ground above the 2024 budget benchmark of $77.
All the premium oil grades traded at an average price of $78.34 in October, 38 cents above the budget benchmark of $77.96, indicating that Nigeria earned $141.638.720 million daily on the extra 108,000 bpd produced in the month under review.
Likewise, with crude oil production, price and exchange rate pegged at 2.06million barrels per day, $75 and N1,400 respectively in the 2025 budget estimates approved last week by the Federal Executive Council (FEC), the three tiers of government are expected to rake in jumbo revenues from oil proceeds, with Nigeria already getting buyers in the futures and forwards markets for some of its crude that will be delivered in the months of December 2024 to March 2025.
A further breakdown and analysis of the current crude production figure of 1.8million bpd at the current average price of $78.34 done by BH indicated that the country will earn $141.634.720 revenue daily. This translates to $4.249billiion in 30 days.
Using the exchange rate of N1,400 to $1 the Federal Executive Council approved for the proposed N47.9 trillion 2025 budget, oil produced in the country will fetch N5.949trillion monthly and N71,383,898.88 yearly if current oil production level and price hold.
While the Federal Government will be getting N37.6trillion of this oil revenue from its own production share of 51%, oil producers, both international and indigenous firms, will retain the remaining 49% totalling N33.784trillion.
Budget 2025
Meanwhile, the Federal Government has released details of how it will spend revenue earned from the oil and gas and non-oil and gas sectors in the 2025 budget.
The Federal Executive Council (FEC) gave the breakdown last Thursday while announcing its approval for the 2025 budget proposal of N47.9 trillion.
The approval is part of the Medium Term Expenditure Framework, MTEF, and Fiscal Strategy Paper, for 2025-2027, by the Fiscal Responsibility Act of 2007, which is expected to be submitted to the National Assembly as required by law on Monday, November 18th.
While briefing State House correspondents at the end of the council meeting presided over by President Bola Tinubu at the Presidential Villa, Abuja, Minister of Budget and Economic Planning, Atiku Bagudu, said the sum of N13.8 trillion will be borrowed to balance the proposed budget, suggesting a much improved earnings projection in 2025.
Bagudu noted that “the Nigerian economy is showing signs of resilience, with a 3.19% growth rate recorded in the second quarter of 2024. This growth is expected to continue through 2025, driven by efforts to tackle inflation and stabilize key economic sectors.
“Non-oil revenue streams, in particular, have performed better than initially expected, showing promising progress”.
The proposed budget includes various provisions, particularly in areas such as infrastructure development, social programs, critical national projects, as well as allocations to regional development commissions recently passed into law by the National Assembly.
“These measures are designed to strengthen the country’s social and economic development at the grassroots level”, the minister stated.
Some experts, who spoke on the development, attributed the increase in Nigeria’s foreign reserves to $40.167 billion as of November 11, 2024, the first time it crosses the N40 billion mark in three years and the stabilization/appreciation of the naira to N1,652.25 at the official market on Friday, November 15th.
Meanwhile, reactions have continued to trail government’s 2025 budget assumptions with experts faulting the revenue projections based largely on rising oil production.
According to the Executive Vice Chairman, Highcap Securities Limited, David Adonri, there is nothing on ground to indicate that the GDP growth rate of 4.6% is attainable in 2025.
“The omission of the forecast for inflation is questionable because the intended GDP growth may just be an inflationary growth, which is akin to motion without movement.
“With Donald Trump’s agenda to release more fossil fuel from 2025, the crude oil price forecast may be misleading.
“Predicating the budget on a crude oil-driven economy shows that budgeting by FGN has not departed from past ruinous economic philosophy.
“It is too pedestrian for a country that should be inward-looking and focused on the mobilization of the idle factors of production in the country”, Adonri argued.
Also speaking, the Head of Equity Research at FBNQest Securities Limited, Tunde Abidoye, said some of the assumptions in the budget are a bit aggressive.
“The oil production benchmark of 2.06mbpd looks very ambitious given the current realized oil production level of around 1.3mbpd (ex-condensates), per NUPRC data.
“The exchange rate and GDP growth rate projections are also a bit optimistic given the current exchange rate is N1,650, and the strain on household wallets.
“However, although I think the oil price benchmark is realistic, there are potential downside risks arising from the anticipated ramp up of oil production by the US following President Trump’s victory at the polls”, Abidoye noted