The oil industry in Nigeria, Africa's largest producer of crude oil, is poised at a critical juncture as production levels begin to recoverFollowing years of downturns and low yields, recent stability in the security landscape has set the stage for potential confrontations with OPEC+ regarding production quotasThis precarious position arises from the dual pressures of an economy heavily reliant on oil exports for revenue and a commitment to adhering to OPEC+'s imposed production limits, designed to stabilize global oil prices.

Last month, Nigeria's oil production reached approximately 1.48 million barrels per day, nearly hitting its OPEC+ quota of 1.5 million barrels per dayThis marks a significant rebound from the low of about 1.1 million barrels daily in 2022, a period characterized by rampant asset sales by oil majors and widespread disruptions to infrastructure due to theft and sabotage

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Such improvements in output are crucial as they directly impact Nigeria's budget, which heavily relies on oil revenues.

Gbenga Komolafe, the Chief Executive Officer of Nigeria's upstream oil regulatory authority, emphasized the government's ambition to boost output to meet budgetary needsHe indicated that once there is a solid commitment to increased production, negotiations with OPEC regarding lifting production quotas could followThe shift in Nigeria’s fortunes has been largely attributed to proactive measures aimed at enhancing security in the oil-rich Niger Delta region, where theft and pipeline destruction had hampered operations for years.

Given the precarious nature of Nigeria's electricity supply and the challenges of governance, the government has intensified efforts to retrieve lost outputInvestments in technological advancements, such as real-time monitoring systems, and local community engagement have begun to yield positive results

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Before improvements were enacted, the Trans-Niger Pipeline—which is responsible for transporting crude—was looted at approximately 150 locations, drastically reducing the amount of oil producers could transport securely.

Analysts remain cautiously optimisticMansur Mohammed of Wood Mackenzie noted that substantial investments have led to the creation of a monitoring command center that tracks the activities of all operators, complementing attempts to curb criminal activities and fostering broader community involvementAs a result of these efforts, it is anticipated that Nigeria's oil production may rise to as high as 2 million barrels per day, marking a ten-year peakHowever, caution persists, highlighting the need for sustainable practices to protect against sabotage.

While notable improvements have been made, there remains a historic context ripe with skepticism surrounding the sustained efficacy of such security measures

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Rystad Energy analyst Pranav Joshi pointed out that until these protective measures are firmly established across Nigeria's extensive pipeline network, projections for average production levels may hover around 1.4 million barrels per day.

Echoing these sentiments, Dipo Ogunbiyi from Renaissance Capital Africa acknowledged that recent increases in production can be traced back not only to improvements in safety but also to significant investments made by operators in the regionFollowing substantial asset divestments by international oil companies like ExxonMobil, local firms have stepped in to fill the void, leading to a marked uptick in drilling operations—over twofold within the last four years, as reported by regulatory authorities.

The momentum being generated by companies such as Seplat Energy, which has plans to double its production post-acquisition of ExxonMobil's onshore assets, demonstrates the growing capacity and ambition of Nigerian-owned firms

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The company aims to raise output to 120,000 barrels per day, with projections indicating a potential rise beyond 200,000 barrels per daySimilarly, Oando, under the direction of Nigerian entrepreneur Wale Tinubu, has outlined plans to ramp up production from 40,000 to 100,000 barrels daily in the coming years.

As Nigeria's oil sector grapples with its relationships with OPEC+, the question remains: will the country part ways with the organization following its ambitious output goals? The recent example of Angola, which faced expulsion from OPEC+ for refusing stricter compliance measures, looms over Nigeria’s current positioningHowever, it is essential to note that the United Arab Emirates successfully negotiated more favorable quotas just six months after its own tumultuous adjustments.

For Nigeria, the pressing need for enhanced oil production has led to a compelling argument—short-term economic gains from exceeding OPEC+ production quotas may outweigh the benefits of complete compliance with the organization's agreements