Nigeria needs improved security, improved investment, and a proper regulatory framework to achieve its target of producing 2.06 million barrels of crude oil per day in 2025.
This is according to an analysis contained in a report by PricewaterhouseCoopers (PwC) International Limited, titled “2025 Nigerian Budget and Economic Outlook.”
According to the analysis, the target is likely achievable, based on three rationales which include:
- Nigeria’s current average production of 1.5 mbpd has to be increased by 37%.
- Improvements in security, investment, and regulatory frameworks.
- Investments by Shell and TotalEnergies in the Bonga deepwater field and the Ubeta upstream that were announced towards the end of 2024.
The report also notes that oil production levels and global oil prices will be a determining factors in Nigeria’s projected revenue growth.
“The FAAC allocation in 2025 will be driven by the outcome of the implemented fiscal reforms, exchange rate fluctuations, oil production levels, and global oil price.”
Recall that the Federal Government of Nigeria has benchmarked the 2025 budget and the 2025-2027 Medium Term Expenditure Framework (MTEF) on a global oil price of $75 per barrel.
PwC in its analysis says this benchmark is “most likely” achievable, noting that the global average oil price in 2024 was $78.05 per barrel.
- It also noted that a high price is dependent on increased China demand, OPEC supply restriction, and US shaling, among other factors.
- Meanwhile, a supply surplus, which U.S. President Donald Trump is advocating, may crash prices in the global market, and this may affect Nigeria’s oil revenue.
Nigeria to benefit from geopolitical developments
The analysis posited that Nigeria will benefit from positive geopolitical developments such as the ceasefire between Israel and Hamas, a potential ceasefire between Russia and Ukraine, and improved relations between the United States and China, among others.
It was stated that these positive developments will help Nigeria reduce inflation and contribute to its overall economic growth.
“The ceasefire in the Israel-Hamas war and the potential ceasefire between Russia and Ukraine are expected to drive favourable outcomes in global trade, enhancing economic stability and growth. Additionally, easing tensions in the South China Sea and improved US-China relations could strengthen global supply chains, reducing inflationary pressures and improving food security globally.
“Stabilised conditions in the Middle East could ensure steady oil supplies, potentially keeping global oil prices stable and mitigating inflationary pressures. As a globally integrated economy, Nigeria stands to benefit from these positive geopolitical developments, which could help manage imported inflation risks and support overall economic growth.”
Key issues for consideration in 2025
The report called for special attention to such issues as:
- Security bottlenecks
- Social protection
- Shocks mitigation
On security bottlenecks, the report noted that “Nigeria is facing security challenges, with 4,520 violent incidents between January 2023 and March 2024, including 2,329 attacks on civilians and 532 fatalities from kidnappings. The 5,356 criminal incidents and 836 farmer-herder clashes have severely disrupted agriculture and local economies, particularly in rural North-Central and North-West regions.
“These security challenges are eroding investor confidence and diverting government resources from crucial development projects, further hindering economic progress.”
Nairametrics reported that crude oil theft is a major problem impeding Nigeria’s oil production targets, causing Nigeria significant revenue losses.
