Nigeria’s 2023 budget is in jeopardy if OPEC limits oil production to 1.38 million barrels per day.
The Organisation of Petroleum Exporting Countries (OPEC) and its allies decided to reduce world oil output by 1.393 million barrels per day which will result in a 20.7 percent reduction in Nigeria’s oil production quota.
The 13-member oil cartel decided to change the overall crude oil production level for OPEC and non-OPEC participating countries in the Declaration of Cooperation (DoC) to 40.46 million bpd, effective 1 January 2024 through 31 December 2024, during the oil market meeting held on June 4, in Vienna.
The largest economy in Africa will have its daily production quota reduced to 1.380 million barrels under the revised production schedule decided upon in the virtual conference, which will run from January to December 2024.
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Given that oil is a significant source of money for Nigeria, the reduction in the oil production quota by OPEC would constitute a restriction on its oil production and exports, which might have an impact on government revenue, budget planning, and overall economic stability.
Nigeria’s expected output quotas for August, September, October, and November were 1.826 million bpd, 1.830 million bpd, 1.826 million bpd and 1.747 million bpd respectively.
However, Nigeria’s inability to meet previous quotas has shrunk dollar proceeds from oil sales. A significant amount of the country’s crude lies stranded as buyers turn to cheaper alternatives.
Recent data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates that Nigeria’s crude oil production dropped to its lowest level in seven months, reaching 998,602 bpd in April this year.
According to a statement by OPEC, the required production level for Congo and Nigeria may be updated to equal the average production that can be achieved in 2024, as assessed by IHS, Wood Mackenzie, and Rystad Energy) specialised in oil upstream by the next ONOMM to be held by the end of 2023.
“Nigeria’s stated production plan in 2024 is 1,578,000 bpd subject to verification, and if verified then the number will be reflected as required production for 2024,” OPEC said.
