Nigeria to witness increase in oil production in 2024 —Report

Analysts at Meristem Research are projecting an increase in Nigeria’s oil production in 2024 barring any significant, unexpected shock to the sector in the year.

The analysts made this known in its recently released Meristem 2024 Annual Outlook titled ‘Setting Sail for Gradual Recovery’

The report lamented the persistent challenges, including pipeline vandalism, illegal oil bunkering that led to the Rumuekpe-Nkopu explosion, oil theft, and the PENGASSAN strike in Q2:2023, noting that all these factors led to the decline of the oil sector’s output in the first half of the year by 8.97% YoY.

Continuing, the report noted that in Q3:2023, the oil sector recorded a lesser contraction of 0.85% YoY (vs 22.67% YoY in Q3:2022). This comes on the heel of a surge in the average oil production by 18.17% YoY to 1.45 mbpd in Q3:2023, marking the sector’s most robust performance since Q2:2020.

However, the report noted that given the commencement of operations of the Dangote oil refinery in December 2023, NNPCL’s resolution of the PENGASSAN strike (expected to lead to the restoration of 275,000 bpd) and expected low base effect in Q4:2022, it is expected that the oil sector to return to growth in Q4:2023.

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“Looking ahead into 2024FY, barring any significant unprecedented or unexpected shock to the sector, we expect oil production to be higher at 1.55mbpd (vs 1.46mbpd 2023), premised on several factors. We envision the federal government’s dedicated efforts to improve output will be crucial in enhancing oil production.

Strategic initiatives, such as introducing the Nembe oil grade to the global market, combined with intensified efforts to curb oil theft, are poised to boost production significantly.

Additionally, noteworthy advancements in the oil and gas sector, such as Nigeria’s USD 533.00mn memorandum of understanding with Saudi Arabia, the ongoing USD 2.80bn Ajaokuta–Kaduna–Kano gas pipeline project by Oilserve Limited, and the commencement of operations at the Dangote oil refinery in December 2023, are anticipated to serve as critical drivers of progress in the country’s oil and gas sector in the medium to long term.

Furthermore, we note that the federal government’s heightened focus on expanding the country’s natural gas production and utilization (evidenced by various agreements signed with international companies and countries, including Indorama Eleme Petrochemicals Ltd and Germany) is likely to be instrumental in propelling the output for Nigeria’s oil and gas sector in 2024.

Lastly, we project that the low base effect will also be reflected in the oil sector growth numbers (especially in the first half of 2024)” the report stated.

By Babajide Okeowo

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