Why Tinubu’s plan for a 2mbpd output in 2025 is “illusory”

Experts who are vast in Nigeria’s Oil and Gas industry say it is achievable but warn that a toxic mix of factors including poor investment in the upstream sector, poor infrastructure, crude oil theft, and corruption, among others, may derail this target and render it a mirage.

Petroleum Engineer and Oil and Gas Analyst, Dr Bala Zakka argued that Nigeria has the potential to increase its crude oil output, but achieving such a feat in 2025 is illusory, taking into account the persistent crude oil theft in the Niger Delta and the exodus on International Oil Companies (IOCs) from onstream exploration in the region.

Speaking on the Federal Government’s oil production target in an interview with Naijaonpoint, Dr Zakka said: “This year, No!. But generally, Nigeria has what it takes to boast the production of crude oil and gas. Nigeria has basins with crude oil in drilling quantities. We have the Delta Basin, we have the Dahomey Basin, we have the Benue Gulf, we have the Anambra Basin, we have the Lake Chad Basin, we have the Gongola Basin. All those basins have been assessed and have been found to have fossil fuel in drilling quantities.” 

The exodus of International Oil Companies from onshore operations in Nigeria poses a threat to meeting the target this year. While the assets of the IOCs were taken up by indigenous companies in new upstream investment deals, Dr Zakka argued that the new investments may not have the desired results until towards the end of the year or the next, as some of the assets had been abandoned before their sales.

He noted that many companies in the upstream sector have suspended exploration, and may not resume until 2026.

“The Bongo North investment you talked about. They will not start drilling until 2026 or even later. Most of these companies have stopped drilling because of the many challenges in the upstream sector. Some have even left,” he said.

Eche Idoko, the spokesperson of the Crude Oil Refiners Association of Nigeria (CORAN), corroborated Zakka as he also lamented about the drop in investment and production in the upstream sector, which had an effect on the crude supply for local refiners in the concluded year.

“There’s also been a reduction in investment and in production. With the whole conversation around energy transition happening in the West, and then we see a lot of divestment by the IOCs. We have seen a drastic reduction in production and investment in production, which is a problem,” he said in an exclusive chat with Naijaonpoint.

Crude oil theft is a menace that has stifled growth in Nigeria’s oil and gas industry for decades. It has cost the country billions of dollars in revenue and massive environmental damage in the Niger Delta region.

“At a time, we were doing 2 million barrels per day, now, we can barely do 1.5. So there has been a drop, and it is a result of a lot of factors. But chief among them is the insecurity around the pipelines,” Idoko noted.

While crude oil theft seems to be the major issue affecting the industry, experts say powerful individuals with access to power perpetuate most of the theft.

He noted that crude oil stolen from Nigeria is sold in the international market and it may be hard to stop “when there is a market ready for it.” He asserted that powerful Nigerians were involved in the theft.

However, Prof Oke expressed optimism in Nigeria’s ability to increase oil production “even before the end of the year”, “but that will depend on what we are able to do in terms of political will and resilience as a country.”

He noted that President Bola Tinubu’s administration is making progress in the war on oil theft, and the administration has also demonstrated the political will to boost the country’s oil output.

He also urged the international community to assist Nigeria in the fight against oil theft by not allowing stolen oil in the international market. “Just like the issue of blood diamonds in Congo was addressed with the help of the international community.” 

He also urged the international community to assist Nigeria in the fight against oil theft by not allowing stolen oil in the international market. “Just like the issue of blood diamonds in Congo was addressed with the help of the international community.” 

The President benchmarked the 2025 budget and the 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) on daily production of $2.06 and a global price of $75 per barrel.

Nigeria’s oil production grew slightly last year, according to data from the Organisation of Oil Producing Countries (OPEC) and the Nigeria Upstream Petroleum Regulatory Commission (NUPRC). However, the country’s output is still below its OPEC quota of 1.5 million bpd.

According to the NUPRC Crude oil production report, below is a breakdown of Nigeria’s average daily crude oil production excluding condensates:

In OPEC’s data, Nigeria’s daily average crude oil production was 1.35 million bpd in Q2 2024, 1.4 million in Q3 and 1.46 million in Q4. The OPEC report noted that this is based on secondary sources.