Can Nigeria sustain oil output rise?

Nigeria's crude oil production has recently shown a significant increase, recording a rise of 25,000 barrels per day to 1.27 million, according to the latest OPEC monthly oil report. This surge in output has brought about discussions regarding the sustainability of this growth and the sector's financial strategies. Temitope Kolade, Senior Manager, Oil, Gas, and Power at Andersen Nigeria, recently shed some light on these developments in an interview with CNBC Africa. The interview delved into various topics, including OPEC's projections, Nigeria's oil production figures, and the potential implications of a proposed $2 billion oil-backed loan by the NNPC. The discourse highlighted concerns about the overall trajectory of Nigeria's oil industry, the prevailing global energy landscape, and the financial decisions being made in the sector. OPEC's July oil report has kept its forecast for global oil demand growth steady for 2024 and 2025, predicting a robust demand of 2.2 million barrels per day in 2024. However, conflicting opinions exist among analysts, with some foreseeing a peak in oil demand by 2025. Factors such as the ongoing energy transition and efforts towards sustainability in oil production raise questions about the future of oil consumption. Despite varying perspectives, the discussion underscores the complexities surrounding oil demand projections and the need for a nuanced approach to planning. Turning to Nigeria's oil production, the country witnessed a notable uptick to 1.27 million barrels per day in June, attributed to a 25,000 barrels per day increase from the previous month. While this growth is promising, concerns linger about the sector's stability and efficiency. Kolade expressed reservations about the recurring challenges in the Nigerian oil industry, emphasizing the importance of addressing key issues like vandalism and theft to maximize production potential. The interview also delved into the NNPC's recent statement regarding a rumored $2 billion oil-backed loan, raising apprehensions about the country's financial strategy. Kolade voiced unease about the prospect of resource-backed loans, warning of potential risks associated with such financing mechanisms. He advocated for sustainable operational practices and cautioned against over-reliance on debt to fund operations. The discussion reflects broader apprehensions about Nigeria's financial health and the necessity of exploring alternative approaches to address economic needs. As the oil industry navigates evolving demand dynamics and financial challenges, stakeholders are called upon to adopt prudent strategies that ensure long-term viability and resilience.