Nigeria Faces Challenges Meeting OPEC+ Oil Production Target, Independent Consultancies Indicate
Nigeria is encountering difficulties in meeting its oil production target set by OPEC+ for 2024, as revealed by independent consultancies tasked with verifying the country’s output. Discrepancies in reaching production goals have led to disagreements within OPEC+, causing a delay in the latest meeting. Nigeria seeks a higher 2024 target amid discussions within OPEC+ about potential production cuts rather than increases. The country aims to boost output by revitalizing dormant oilfields and addressing security threats. Three independent consultancies— IHS, Rystad Energy, and Wood Mackenzie—have been assigned to verify Nigeria’s, Angola’s, and Congo’s ability to achieve their targeted 2024 output levels.
Key Points:
OPEC+ Meeting Delay: Disagreements over production quotas for African producers, including Nigeria, have resulted in a delay in the OPEC+ meeting. The group is considering potential production cuts, and Nigeria is seeking to have a higher 2024 target approved by OPEC+.
2024 Output Target Cut: In June, OPEC+ reduced Nigeria’s 2024 output target to 1.38 million barrels per day (bpd) from the 2023 target of 1.74 million bpd. The group granted Nigeria a 2024 quota of 1.58 million bpd, contingent on independent verification. Past failures to meet targets influenced the decision to seek independent assessments.
Independent Consultancies’ Findings: Consultancies IHS, Rystad Energy, and Wood Mackenzie were tasked with verifying production capacity. Figures from two of the consultancies suggest that Nigeria’s 2024 crude output may not reach 1.58 million bpd. This challenges Nigeria’s push for a higher quota and complicates broader OPEC+ agreements.
Current Production Levels: Nigeria presently produces 1.3 million bpd, with expectations to reach 1.5 million bpd in 2024 under a base-case scenario, according to Rystad Energy. However, achieving the higher 1.58 million bpd target faces challenges, including potential disruptions.
Impact on OPEC+ Talks: The lack of verification on Nigeria’s production capabilities adds complexity to ongoing OPEC+ discussions on quotas. The group has not indicated how this will affect talks, and Nigeria’s governor to OPEC expressed comfort with the findings of the consultancies.
Underlying Challenges: Underinvestment and unrest in Nigeria’s oil-producing Delta region have contributed to a decline in oil output from around 2 million bpd five years ago to the current levels. The country’s October crude output is reported to be close to its 1.38 million bpd 2024 quota.
Conclusion: Nigeria’s challenges in meeting its OPEC+ oil production target highlight the complexities within the alliance and the importance of independent verification in setting production quotas. Discrepancies in reported figures and the country’s historical struggle to meet targets underscore the need for transparent and reliable assessments. The outcome of OPEC+ discussions and the impact on Nigeria’s quota will have implications for the country’s oil revenue and broader economic stability.