Nigeria’s perennial challenge of meeting its OPEC 1.5 million barrels per day quota
The inability of Nigeria to meet its OPEC assigned quota of 1.5 million barrels per day (mbd) has remained a major challenge to the Federal Government because of its huge implications for the fiscal sustainability of the annual budget, which for the most part has been based on a benchmark far above the OPEC quota.
The inability of Nigeria to meet its OPEC assigned quota of 1.5 million barrels per day (mbd) has remained a major challenge to the Federal Government because of its huge implications for the fiscal sustainability of the annual budget, which for the most part has been based on a benchmark far above the OPEC quota. For ten months between January 2025 and January 2026 and for seven consecutive months, Nigeria missed its OPEC quota, according to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), resulting in a loss of 1.76 trillion naira.
Nigeria in 2010 recorded its highest ever crude production of 2.46 mbd but has since 2022 struggled to meet its OPEC quota. Factors responsible include oil theft, insecurity, vandalism, aging pipes and many years of disinvestment by international oil companies (IOCs) or oil majors, due to poor business environment, especially uncompetitive fiscal incentives and for the above reasons, including insecurity. With the much improved business environment and fiscal incentives of the current government, both the government and oil majors are looking forward to deepwater exploration and production as the long term solution to significant improvement in Nigeria’s overall oil production. But what can be done in the short to medium term?
The oil and gas sector has since the 1970s played a prominent role as the chief source of Nigeria’s export earnings accounting for over 90% of foreign exchange incomes from 1980 (95%-97%) to 2010 ((94%) and to 75% in 2025. Also during the same period, crude oil accounted for 80% of federally collectible revenue, but has sharply declined to 25% by early 2026, which is the result of the aggressive non-oil revenue drive of the Tinubu Administration.
Nigeria’s crude oil production peaked at 2.46 mbd in 2010 according to OPEC data and averaged 1.798 mbd between 1980 and 2024. Nigeria ranked as 10th largest crude oil producer in the world in December 2024 but has since taken the lower rank of 15th or 16th globally, signifying the structural nature of the challenges facing the Nigerian oil and gas industry, which to a large extent are peculiar to Nigeria. Nigeria has for decades maintained the pride of place of having one of the largest crude oil reserves in the world; and historically has been the largest crude oil producer in Africa. But that position is now threatened by Libya, which produced 1.3 mbd in March 2026, right behind Nigeria’s March output of 1.36 mbd. This shows the urgency of finding short to medium term solutions to Nigeria’ crude oil production struggles.
The impediments to increasing Nigeria’s crude oil output are not just technical, but structural, institutional, and political – which can be summarised as bad political, social and economic governance. This is not simply an indictment of the government, past or present. But at the bottom of it all is lack of political will on the part of the community of political actors in Nigeria to address the critical issue of fiscal federalism. Fiscal federalism means that the ‘federating units’ have direct control over their resources, with an agreed tax payable to the central government; and another portion to be distributed to the other ‘federating units.’ This gives the ‘federating units’ where the resources are located a sense of ownership and a commitment to developing those resources and protecting them and their associated infrastructure against criminal attacks and vandalism. The level and extent of pipeline vandalism and illegal refining of crude oil with devastating environmental impact are consequences of social and economic injustices against the people of the Niger Delta concerning insufficient compensation and control over their resources. This is against the background of decades long artisanal and illegal mining of solid minerals in Northern states without any consequences. Unless the people of the Niger Delta feel adequately compensated for the hydrocarbon resources in their domain, illegal refineries and pipeline vandalism and general insecurity associated with oil and gas exploration and production in the Niger Delta may persist, no matter the security arrangements put in place. This reality need to be recognised and addressed. It is a national political and economic imperative. In the short term, relevant sections of the Petroleum industry Act (PIA) 2021 may need to be amended to give the oil and gas host communities of the Niger Delta a greater sense of belonging. In this regard, the provision in the Act of 3% of the annual operating expenditure (OPEX) from oil companies to the Host Community Development Fund (HCDF) may need to be increased.
Secondly, the arrangement put in place to secure the oil and gas pipelines in the Niger Delta should involve all the Niger Delta communities. There have been justifiable agitations by a cross-section of Niger Delta communities for this to happen, but the government does not seem to be paying attention. The consultative meeting on pipeline security held at the National Assembly on April 8, 2026 seems to have reinforced this position, with oil and gas operatives and legislators at the forum taking the position that the contract given to Tantita Security Services Nigeria Limited (TSSNL), a prominent oil and gas infrastructure protection security firm, should not be fragmented. The issue is not contract fragmentation but ownership and control of the company. The company should be transformed into a Niger-Delta community-wide-owned infrastructure protection company, which provides a platform for a commitment by all Niger Delta communities for the protection of critical oil and gas assets all over the Niger Delta, with benefits of the contract accruing to all communities and stakeholders in the entire Niger Delta region. The founder and owner of the company will still remain at the helm of affairs with adequate benefits accruing to him. However whatever financial losses he might sustain through a community ownership structure of TSSNL should be compensated by the Federal Government giving him other contracts in the oil and gas logistics value chain, including cabotage operations in the Nigerian oil and gas industry. Other Niger Delta entrepreneurs should be equally encouraged to take advantage of such oil and gas services opportunities.
