Nigeria’s 2024 Budget Faces OPEC Test as Negotiations to Raise Quota Continues

Emmanuel Addeh in Abuja

The implementation of Nigeria’s 2024 budget will this week face a major test as negotiations between the country and the Organisation of Petroleum Exporting Countries (OPEC) to raise oil output allocation for next year continue.
Last Wednesday, the Senate approved the Medium-term Expenditure Framework (MTEF) for ‪2024-2026 and the Fiscal Strategy Paper (FSP), which contained projections for budget appropriations over the next three years.

Specifically, the lawmakers approved $73.96, $73.76, and $69.90 per barrel, respectively as benchmark oil prices for daily crude oil production of 1.78 million bpd, 1.80 million bpd, and 1.81 million bpd for 2024, 2025, and 2026.
However, THISDAY can report that the figures may be unrealistic, given that OPEC’s quota for Nigeria for next year was in June pegged at 1.38 million bpd, following its inability to meet its current allocation for about three years.

But Bloomberg reported that OPEC is close to resolving the dispute over the output quotas, which forced the group to postpone a pivotal meeting during the week, as it reviews the demands made on Nigeria and Angola in an earlier deal.
The group is working to tweak the 2024 targets set for both countries to allay the unease they expressed in recent days, a delegate told Bloomberg.
Deadlock on the issue compelled Saudi Arabia and its partners to postpone their policy-setting gathering in Vienna this weekend to next week. Talks continue and agreement looks within reach, officials said.

The spat dredged up a disagreement from June, when Angola, Congo, and Nigeria were pushed by Saudi Energy Minister, Prince Abdulaziz bin Salman, to accept reduced output targets for 2024 that reflected their diminished capabilities.
The African exporters have struggled in recent years with under-investment, operational disruptions, and aging oil fields.
A compromise now would allow OPEC and its partners to focus on whether they need to agree on steps to tighten supplies in 2024, amid the threat of slowing demand — and falling prices.

OPEC+ leaders Saudi Arabia and Russia are expected to at least extend just over 1 million barrels-a-day of output curbs through the first quarter, to pare a looming surplus.
In the past two months, Brent crude futures have slumped by about 15 per cent to trade around $81 a barrel at the weekend, eroding revenues for the cartel.
At OPEC’s latest meeting in June, Angola and Nigeria were pressed to accept considerably lower limits for 2024, at 1.28 million barrels a day and 1.38 million a day respectively.

The countries had reluctantly acquiesced to the new quotas with the caveat that they’d be revised higher again if an external audit by three firms  — Rystad Energy A/S, Wood Mackenzie Ltd., and IHS — proved their capacity was larger.
That assessment has been submitted, but the trio pushed back against its findings, officials said, speaking on condition of anonymity.
Nigeria has shown recently that it can surpass its new limits. It pumped 1.416 million barrels a day last month (secondary sources) or 36,000 barrels a day above its target for 2024, according to data from OPEC’s Vienna-based secretariat.

The postponement of the meeting of OPEC and allies such as Russia, known as OPEC+, from November 26 to November 30 sent oil prices sharply lower on Friday, it was learnt. But they have since recovered, with Brent crude prices trading above $81 a barrel.

One of the sources, who spoke on condition of anonymity, said he felt “with 99 per cent confidence” that OPEC+ could reach an agreement on November 30.”
A second source said that an “understanding has been reached” over the African producers’ issue. Two other sources said that an agreement was near.

But Nigeria’s governor to OPEC and Permanent Secretary, Ministry of Petroleum, Gabriel Tanimu Aduda told Reuters that he was not aware of any disagreements with other members of OPEC+ over the country’s production targets.