Nigeria projected revenue from crude oil sales in 2024 will be unattainable due to the intensified reduction in crude oil production by OPEC and its coalition partners. During their virtual gathering on November 30, 2023, the coalition of oil-producing countries, referred to as OPEC, declared an increase in independent reductions by 2.2 million barrels per day (bpd). This decision was made with the intention of bolstering the equilibrium and harmony within the global oil markets.
These levels of reduction, willingly undertaken by its members, are based on the projected production requirements for 2024. During the assembly, which aimed to address apprehensions about a possible surplus in the market and talk about projected output for 2024, the cartel announced their decision to elevate Nigeria’s production allocation. They intended to raise it from 1.38 million bpd to 1.5 million bpd, yet emphasized that this 8.69 percent increase would undergo further examination before finalization.
A decision was reached among OPEC nations of extensions.
OPEC announced that, based on the existing oil market conditions and in line with the decision made during the 35th OPEC and non-OPEC Ministerial Meeting, Angola, Congo, and Nigeria have undergone assessments by three independent sources (IHS, Wood Mackenzie, and Rystad Energy) to determine their production levels for 2024. The results are as follows: Angola at 1,110 t/bd, Congo at 277 t/bd, and Nigeria at 1,500 t/bd. The acronym t/bd describes a state of uncertainty, referring to matters that are yet to be established or resolved. This comes in light of OPEC scheduling its 37th meeting to take place in Vienna on June 1, 2024.
In the latest development, a decision was reached among OPEC nations. These nations, responsible for more than 40 percent of global oil production, agreed on an extension of Saudi Arabia’s voluntary reduction of one million bpd, which has been in effect since July. Additionally, Russia took a step to curtail its output by 500,000 bpd, and other OPEC members also voluntarily decreased their production levels. This decision comes amidst rising tensions between several OPEC nations and Western countries due to the ongoing geo-political conflict between Israel and Hamas.
Quota granted to Nigeria at the OPEC resolution.
Angola and Nigeria are rigid in their resistance to limiting production despite the cartel already reducing their output by approximately five million bpd, currently standing at a staggering 43 million bpd. Nigeria’s production goals have been consistently missed, with OPEC recently slashing the country’s output target for 2024 to 1.38 million bpd from the previous 1.74 million bpd set for 2023. This reduction highlights the ongoing challenges faced by the country in meeting its desired objectives.
However, Nigeria was granted a 2024 quota of 1.58 million bpd by OPEC in their previous gathering, with a condition that it could only be achieved if independent verification confirmed their pumping capacity. But then, President Bola Tinubu revealed during his budget presentation on November 29 that his administration has chosen a cautious approach when it comes to oil prices, setting the benchmark at 77.96 US dollars per barrel. Additionally, they have estimated a daily oil production of 1.78 million barrels per day, taking into consideration both global oil market trends and domestic circumstances.
Tinubu’s optimism regarding the crude benchmark for 2024 impracticable.
It was reported that the Federal Government adopted a naira-to-US dollar exchange rate of N750/$1 for the year 2024. The proposed budget encompasses a total expenditure of N27.5 trillion. Within this amount, N9.92 trillion is allocated to non-debt recurrent expenditure, N8.25 trillion is designated for debt servicing, and N8.7 trillion is set aside for capital expenditure in the 2024 appropriation. The government’s projections for the economy are highly uncertain, including whether it will witness a minimum growth of 3.76 percent which surpasses the global average forecast. In addition, there are doubts about the possibility of inflation, currently at 27.33 percent, moderating to 21.4 percent by 2024.