Oil production in Nigeria increased by 51,000 barrels per day (tb/d) to 1.28 million barrels per day (mb/d) in April 2024, according to OPEC’s oil market report .
While this is a positive development, this output still falls below both OPEC’s 2024 quota for Nigeria (1.38 mb/d) and the government’s 2024 budget benchmark (1.78 mb/d).
This increase has positive implications for the Nigerian economy by increasing oil exports, which in turn, will increase foreign exchange inflow to the country and strengthen the foreign reserves.
However, the output being below the benchmark in the budget implies that Nigeria is not producing and exporting enough oil to meet its budgetary expectations. Low production reflects the challenges in the country’s oil sector such as crude oil theft, oil bunkering, illegal refining, and other disruptions to the production process.
To boost production and meet the budget benchmark, the government should improve security at oil facilities across the country to deter bunkering and all forms of oil theft.
Additionally, the government should provide an enabling environment to increase investment in key areas of the oil sector including infrastructure. Beyond the sale of crude oil, there is a need to invest in the speedy completion of the work being done in refineries across the country.
This will help to boost foreign earnings as refined oil output generates higher export earnings than the crude form.
CSEA Africa
