Nigeria’s oil output rises amid OPEC’s cut in forecast

Nigeria’s crude oil production increased to 1.45 million barrels per day in September, a positive development for OPEC’s total output. This rise in output comes at a time when global oil prices are rallying due to recovering demand post-COVID and upcoming holiday seasons. Femi Oladehin, Partner at Argentil Capital Partners Limited, highlighted the implications of this increase in production for Nigeria. Despite the positive outlook, challenges remain for the country in meeting its OPEC allocation due to infrastructure constraints that have hindered production in the past year. Oladehin emphasized the importance of Nigeria being able to take advantage of the current oil price rally by ensuring sufficient production levels. The energy transition in Nigeria is also a key focus, with divestments from IOCs leading to opportunities for local players to step in. While there has been an increase in local capacity in the marginal field sector, larger fields still pose a challenge for local operators. The need for significant capacity upscale and management expertise is crucial for Nigeria to recover its production levels and potentially increase its reserves. On the policy front, the Central Bank of Nigeria’s move to adopt the I&M window for cross-border trades is seen as a step towards providing clarity and simplicity for businesses. The FX market in Nigeria has faced disconnections in the past, and improved policy consistency could lead to positive outcomes. A transparent and efficient exchange rate system is essential for enhancing production capacity and fostering economic growth in Africa. Addressing inefficiencies in Nigeria’s ports is another critical area that requires attention for the country’s economic development. Inefficiencies at the ports have not only increased transportation costs within Nigeria but have also impacted international trade costs. Reforming the import and export processes to make ports more efficient and cost-effective could significantly benefit Nigeria’s trade operations and economy. As Nigeria looks towards the future, investing in policies that ensure predictability and transparency will be key to attracting investors and positioning the country as a favorable investment destination in Africa. With a focus on improving exchange rate stability, transport infrastructure, and customs efficiency, Nigeria can leverage its vast economic potential and population size to drive sustainable growth and development.