The Economic Intelligence Unit (EIU) has forecasted a “tentative” increase in Nigeria’s crude oil production, rising from an average of 1.12 million barrels per day (b/d) in 2022 to 1.4 million barrels per day by 2028.
The Economist Group’s research and analysis division, which provided this insight in its Nigeria country report, released on Thursday, attributed this projection for 2028 to recent sector developments.
These developments include the near completion of the Dangote refinery, stability in the Niger Delta oil-producing region, and the full commercialization of the Nigerian National Petroleum Corporation Limited (NNPCL).
The report read, “In terms of petrol, it seems likely that prices will again be deregulated when the Dangote refinery is able to replace imports from late 2024 onwards, to incentivise the facility to sell locally rather than export its output.
“Deregulated pricing will also allow NNPC Limited, which initially absorbs subsidy costs (which are then deducted them from federal revenue), to start operating as a commercial entity, as required by the 2021 Petroleum Industry Act (PIA), a major piece of oil sector legislation.
“Combined with more competitive fiscal terms under the PIA, eventual commercialisation of NNPC Limited makes the outlook for investment in hydrocarbons stronger. Multinationals in joint venture partnerships with the company will be more confident about cash-calls being met.
“Oil production has been falling over the past decade, but we tentatively project a gradual rise in output, from an average of 1.12m barrels/day (b/d) in 2022 to 1.4m b/d in 2028. The increase will not necessarily be linear, however, given numerous operational difficulties, in particular insecurity in the Niger Delta.
“We expect oil export volumes to increase as security in the Niger Delta allows for higher oil output, and the balance will be complemented by the displacement of fuel and chemical imports in 2024 as the Dangote refinery ramps up production.”