Nigeria’s crude oil production surged to 1.53 million barrels per day (bpd) in January, marking a significant milestone as the country met its Organization of Petroleum Exporting Countries (OPEC) production quota for the first time since it was set at 1.5 million bpd for the 2024 period.
The production target, established at OPEC’s ministerial meeting on November 30, 2023, had remained elusive for over a year, prompting concerns over Nigeria’s ability to sustain output levels amid persistent challenges in the sector.
OPEC’s latest monthly oil market report, released on Wednesday, cited figures from direct communication with Nigerian authorities confirming the increase in production. The report indicated that January’s crude output represents a 54,000 bpd or 3.6 percent increase from the 1.48 million bpd recorded in December 2024. This development cements Nigeria’s position as Africa’s largest oil producer, surpassing Algeria, which recorded an output of 907,000 bpd in the same period. Congo, with an output of 251,000 bpd, ranked as the third-largest producer on the continent.
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OPEC also noted that secondary sources, such as energy intelligence platforms, reported a slight decline in Nigeria’s crude production. According to these alternative estimates, production fell by 2 percent to 1.49 million bpd in January, down from 1.52 million bpd in December 2024. This discrepancy between data sources is not uncommon in oil reporting and underscores ongoing concerns over production transparency and the reliability of figures.
Beyond Nigeria, the broader OPEC-12 crude oil production saw a marginal decline, averaging 40.62 million barrels per day in January 2025, which represents a 118,000 bpd decrease compared to the previous month. While Libya, Congo, and Gabon recorded increased output, production levels in Nigeria, the United Arab Emirates (UAE), and Venezuela declined. Additionally, non-OPEC+ crude production averaged 13.94 million bpd, with notable increases from Kazakhstan, while Russian production declined.
Oil Revenue and Nigeria’s Increasing Budget Deficit Concerns
The surge in Nigeria’s oil production comes at a critical time as President Bola Tinubu recently submitted a revised 2025 budget to the National Assembly, increasing it from N49.7 trillion to N54.2 trillion. The latest adjustment, which the President attributed to additional revenue projections from key government agencies, has raised concerns among economic analysts and political observers that Nigeria may be heading toward another significant budget deficit.
With Nigeria’s debt profile already a growing concern, the increase in government spending, combined with the fluctuating performance of key revenue sources, has sparked debates about how the administration plans to finance the new budget without further deepening the country’s fiscal crisis. Nigeria has struggled with revenue generation, with oil remaining the country’s primary source of foreign exchange earnings despite ongoing efforts to diversify the economy.
Thus, the latest oil production increase is expected to positively impact government revenue if sustained, offering the administration a much-needed boost to fund the expanded budget. Crude oil accounts for over 80 percent of Nigeria’s foreign exchange earnings.
However, economic analysts warn that while increased oil production is a positive development, Nigeria’s ability to fully capitalize on rising output will depend on global oil prices, production stability, and efficient revenue management. If crude prices remain strong and Nigeria maintains or exceeds the 1.5 million bpd quota, it could partially offset the budgetary strain and reduce the country’s reliance on external borrowing. However, if production levels fluctuate due to oil theft, vandalism, or regulatory challenges, the expected financial relief may not materialize.
Dangote Refinery’s Role in Strengthening Nigeria’s Oil Sector
OPEC’s report also highlighted expectations that Nigeria’s crude oil production would rise further in the coming months, thanks to the Dangote Refinery’s progress toward full operational capacity. The refinery, Africa’s largest, is set to transform Nigeria’s energy sector by reducing dependency on imported petroleum products while creating a reliable domestic market for locally produced crude.
“The oil sector remains central to the economy, and the Dangote Refinery reaching full production capacity should help stabilize the petroleum product supply and possibly lower petrol prices,” OPEC noted in the report.
Edwin Devakumar, vice president of Dangote Industries Limited (DIL), recently stated that the refinery is expected to reach full capacity within 30 days. At peak operation, the facility will process approximately 650,000 barrels of crude per day, an output level experts believe is more than sufficient to meet Nigeria’s domestic demand for petroleum products while allowing surplus refining for export.
Can Nigeria Reach 3 Million Bpd by 2025?
Following the positive momentum, the federal government has set an even more ambitious target of achieving 3 million bpd by 2025, according to Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil). However, this goal remains challenging, given the persistent issues of oil theft, pipeline vandalism, underinvestment in exploration, and an aging infrastructure.
Security concerns play a major role in output fluctuations. The Niger Delta, Nigeria’s oil-producing region, has long been plagued by pipeline sabotage and oil theft, with billions of dollars lost annually to illicit activities. The government’s ongoing security interventions have yielded mixed results, and industry experts warn that without a lasting solution, maintaining steady production above 1.5 million bpd will remain a struggle.
Moreover, while the Dangote Refinery promises to ease Nigeria’s dependence on imported refined petroleum products, it also presents a new dynamic for the country’s crude oil market. If the refinery sources the majority of its feedstock domestically, it could alter Nigeria’s export patterns and impact government revenues.