Nigeria’s oil production targets could be a stretch, analysts say

OPEC+ member Nigeria is unlikely to reach its oil production target in 2024 after years of declining output, according to figures from two of three consultancies the cartel has tasked with verifying the country’s output ahead of policy decisions.

The Organization of the Petroleum Exporting Countries and allies such as Russia, known as OPEC+, delayed its latest meeting due to disagreements over the production quotas of African producers including Nigeria and Angola, sources said.

Nigeria is seeking to have a higher 2024 target verified by OPEC+ at a time when the group is considering cutting output further rather than increasing it.

In June, OPEC+ cut Nigeria’s output target for 2024 to 1.38 million barrels per day from 1.74 million bpd for 2023, reflecting the fact that for years Nigeria had failed to meet its targets.

The group, however, agreed to give Nigeria a 2024 quota of 1.58 million bpd, subject to independent verification that it could really pump that much.
Nigeria is looking to boost output by resurrecting dormant oilfields and pushing more production onshore, and is introducing fresh measures to address security threats.

OPEC+ tasked three independent consultancies – IHS, Rystad Energy and Wood Mackenzie – to verify whether Nigeria, as well as Angola and Congo, can reach their targeted 2024 output levels. They will report their findings at Thursday’s OPEC+ meeting.
The use of independent assessments comes after past disagreements about countries’ oil output and production capacity, metrics that feature in negotiations to set individual targets.

Figures from two out of the three consultancies indicate that Nigeria’s 2024 crude output is not likely to reach 1.58 million bpd, potentially challenging the country’s push for the higher quota and complicating a wider OPEC+ agreement.
Nigeria currently produces 1.3 million bpd of crude, according to Rystad, which it expects to rise to 1.5 million bpd next year under its base case scenario.

Read also: Nigeria’s stubborn push for higher OPEC quota leaves cartel leaders scrambling

“This is assuming no further major disruptions,” Patricio Valdivieso of Rystad told Reuters.

A source at another of the three consultancies, which declined to be identified, said that although they had raised estimates for Nigerian output, they don’t expect it to hit 1.58 million bpd next year.
OPEC+ has not indicated how the lack of verification will affect quota talks. Nigeria’s governor to OPEC Gabriel Tanimu Aduda told Reuters last week he was comfortable with the findings of the three consultancies.

Underinvestment and unrest in the oil-producing Delta region has squeezed Nigeria’s oil output from around 2 million bpd five years ago, depriving the government of much-needed revenue.

OPEC figures put the country’s October crude output close to its 1.38 million bpd 2024 quota.