Nigeria’s 2025 budget, which is pegged on an optimistic oil price and production of over two million barrels per day (bpd), may suffer a major threat given the decision by the Organisation of Petroleum Exporting Countries (OPEC) to maintain production cut into 2026.
The decision, analysts said, may freeze oil prices as Brent traded for about $72 per barrel yesterday with the highest in the last month being about $75 per barrel.
Nigeria is proposing a budget of N47.9 trillion for 2025 while the Federal Government’s revenue is projected at N34.82 trillion, a 34.6 increase from the 2024 Budget. The revenue target may only be realistic on the assumption of an oil price of $75 per barrel and production of two million bpd.
Currently, Nigeria produces less than 1.5 million barrels per day while the country’s OPEC quota for 2025 stands at 1.5 million barrels per day.
With existing production already committed to crude swap deals and asset-backed loans, realising government’s revenue projections and addressing the foreign exchange crisis may be a mirage.
The oil ministers at the 38th session of OPEC emphasised the critical importance of full conformity with production levels and the implementation of a robust compensation mechanism to enhance transparency and preserve market equilibrium.
Nigeria’s budgets, always benchmarked on oil prices, have underperformed with the last 10 years being the worst amidst huge budget deficits and rising debts.
Senior Research Analyst at Energy Intelligence, Amena Bakr, said OPEC and its supporting partners decided to extend the collective group cut by one year until the end of 2026.
In recent months, OPEC had to readjust its oil demand output downward. Previously, OPEC planned to increase the production cuts from next month with an initial 180,000-bpd increase in production while gradually returning all the supply by the end of 2025.
Combined with the cost of oil production per barrel, which the Nigerian National Petroleum Company Limited vowed three years ago to reduce to $10, but currently stands at about $48, Nigeria may borrow more to finance the 2025 budget.
In January, Nigeria’s average daily oil production was 1.42 million, in February, it was 1.322 million barrels per day, in March, average daily production dropped to 1.23 million barrels, in April, it stood at 1.28 million barrels, in May, oil production fell to 1.25 million barrels, in June, 1.25 million, 1.5 million barrels per day in July, 1.57 million barrels per day in August, 1.54 million barrels per day in September and 1.43 million barrels per day in October.
Rising from the 38th meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC, Nigeria’s Minister of State for Petroleum (Oil), Heineken Lokpobiri, emphasised the critical role of collaborative efforts in ensuring a balanced and sustainable oil market.
“This meeting reflects the unity and resolve of OPEC and its partners to maintain stability and ensure a balanced market. Nigeria remains steadfast in supporting these efforts while pursuing our national objectives within the global energy landscape,” Lokpobiri stated.
He said Nigeria remains dedicated to fostering partnerships within OPEC and beyond, contributing to global energy security while ensuring the sustainable development of its resources.
