Concerns over Nigeria’s N55tn Budget as Crude Output Deficit Hits 390,000bpd
Emmanuel Addeh in Abuja
There are growing concerns over the ability of the federal government to fully implement Nigeria’s almost N55 trillion budget for 2025 as the deficit in the country’s crude oil production benchmark of 2.06 million barrels per day climbed to over 390,000 bpd in February.
Data obtained from both the Organisation of Petroleum Exporting Countries (OPEC) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicated that in February, Nigeria was neither able to meet its OPEC quota of 1.5 million bpd, nor did it move closer to hitting its crude output forecast of over 2 million bpd in this year’s budget.
While OPEC does not compute condensate production, Nigeria has quite a good volume of the commodity and is usually part of its total expected crude oil output in the budget every year.
In all, while Nigeria was supposed to move closer to the 2.06 million crude oil and condensate benchmark in this year’s fiscal document, in February, the country recorded a reduced production of 1.671 million bpd, to increase the output gap.
The NUPRC data on Nigeria’s crude oil production saw oil and condensate output falling from 1.73 million bpd in January, a major blow to the successful implementation of this year’s budget.
Nigeria is targeting a crude oil production of 2.06 million bpd, including condensate in its 2025 budget, pegging it at $75 per barrel oil price for the year. However, none of the parameters have been met this year.
Nigeria, Africa’s largest oil producer, has long struggled with fluctuating oil production due to a mix of operational, economic, and security challenges. Despite its vast reserves of up to 37.5 billion barrels, the country faces persistent issues that undermine its ability to meet production targets and maximise revenue from its oil sector.
One of the most pressing concerns is oil theft and pipeline vandalism. In the Niger Delta, organised criminal networks siphon off significant volumes of crude oil, leading to substantial losses for both the government and oil companies.
The damaged pipelines not only disrupt supply but also result in environmental degradation, further complicating efforts to maintain stable production.
Another major issue is aging infrastructure and underinvestment. Many oil fields and pipelines are decades old and require extensive maintenance or upgrades. Beyond domestic challenges, external factors such as fluctuating global oil prices also affect the country. When prices drop, investment in new projects slows, and government revenues shrink, affecting the broader economy.
But according to the NUPRC data, among others, production decreased in Ebok stream/terminal from 283,239 barrels to 278,452 barrels; it fell from 120,796 barrels to 40,447 in Ajapa terminal and slumped from 4 million barrels to 3.68 million barrels in Bonga in February.
In addition, during the period under consideration, production from Erha terminal fell from 2.1 million barrels to 1.8 million barrels; 2.1 million barrels to 1.8 million barrels in Egina; from 504,000 barrels to 200,000 barrels in Oyo terminal and from 425,878 barrela to 408,590 barrels in Pennington.
Besides, the biggest volumes of output slump, took place at the Bonny terminal from 8.1 million barrels to 6.3 million barrels; also it rescued from about 1 million barrels to 876,000 in Brass; 4.63 million barrels to 4.2 million barrels in Qua Iboe; 8.8 million barrels to 7.7 million barrels in Forcados; 4.4 million barrels in Excravos to 3.8 million barrels and 2.3 million barrels to 2 million barrels in Odudu terminal.
“Lowest and peak production in February were 1.60 million bpd and 1.76 million bpd respectively. The daily average production in February was 1,671,953 barrels per day, comprising both crude oil of 1,465,006 bpd and condensate of 206,948 bpd.
“The average crude oil production was 98 per cent of OPEC quota of 1.5 million bpd”, the NUPRC data stated.
Nigeria’s 2025 budget was recently officially approved at N54.99 trillion (approximately $36.6 billion), marking a 56.89 per cent increase from the previous year’s N35.05 trillion budget.
The budget anticipates total revenue of N36.35 trillion, with oil revenues expected to contribute 56 per cent of government income, with a projected budget deficit of N13.8 trillion, equivalent to 3.87 per cent of the estimated Gross Domestic Product (GDP).
With an ambitious crude oil production target of 2.06 million bpd and a benchmark price of $75 per barrel, the projected exchange rate is N1,400 to $1. To achieve the ambitious revenue target, Nigeria must meet its crude oil production target as well as hope that the $75 per barrel crude oil price holds.
On the OPEC side, Nigeria self-reported a drop in crude oil production in February to the tune of 74,000 barrels per day, raising grave concerns over the capacity of the country to fund its biggest budget (nominal value) in history.
OPEC, in its Monthly Oil Market Report (MOMR) indicated that the country’s crude oil production declined from 1.54 million bpd in January to 1.47 million bpd in February, about 4.81 per cent decline.
But secondary sources, mainly OPEC consultants, showed that crude oil production in the West African country rose to 1.56 million bpd in February from 1.53 million bpd in January, indicating a 1.96 per cent increase.
Essentially, OPEC receives data on crude oil production from two sources: direct communication from member countries, and secondary communication, that is data from energy intelligence platforms.
However, with the current production volume, the global oil body said Nigeria still retained its position as the biggest oil producer in Africa, with Algeria coming second with 912,000 bpd output.
