This week, we beam our searchlight on the January 2025 oil production status data published by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
According to the data, the country’s major oil terminals performed well in January – Otakpipo (up 12.9% m/m), Escravos (up 11.9% m/m), Que Iboe (up 10.9% m/m), Bonny (up 4.1% m/m), Yoho (up 3.1% m/m), Antan (up 2.7% m/m), Forcados (up 2.6% m/m), Okono (up 1.3% m/m) and Tulja-Okwuibome (up 0.4% m/m).
Resultantly, aggregate output increased by 3.6% to 47.7m barrels, implying daily average output of 1.54 million barrels (mb) excluding condensates of 198,783bpd – the highest output level in three years. Against this backdrop, Nigeria surpassed its OPEC quota for the month by 3.0%, the first of such episode in several months.
We welcome this development, as it is critical to strengthening FX reserves accretion and the revamping of fiscal capacity, if sustained.
Precisely, should the momentum be built upon in the coming months to deliver the baseline crude oil output of 2.01mbpd, budgeted oil revenue shortfall for the year may not be as significant as it was in 2023 and 2024 where it underperformed by more than 30.0% in each period. Recall that in our macroeconomic note last week, we highlighted that the FG’s projected revenue of ₦40.9tn for 2025 (in which the proceeds of crude oil & gas is expected to contribute 47.7%) could be jeopardized by disappointing oil output.
Notwithstanding the impressive output for January, we are measured in our optimism. Our cautious optimism is underpinned by a similar output spike in January 2024 (up 6.9% m/m to 41.4mbpd) but failed to be sustained in subsequent months. The major drag factors to steady crude oil output in Nigeria – theft, pipeline vandalism, and paucity of new investment rig assets – have not been tackled headlong.
While we applaud the recent commitment by security agencies (notably, the military) to ensure oil theft is curtailed in the Niger-Delta region, we are concerned that the weak or non-deployment of modern advanced equipment to monitor end to end flow of crude oil may mean that the recent gain may not be an enduring one. Overall, we posit that curbing oil theft through strong government action is pivotal to ramping up crude oil output to the target level.
Afrinvest
