Persistent production shortfalls cost the country over 18 million barrels in a year, despite relatively firm oil prices and renewed reform pledges…..
Nigeria’s oil sector underperformed its production benchmark for much of the past year, leading to an estimated N1.76 trillion in lost crude revenue between January 2025 and January 2026.
An analysis of data from the Nigerian Upstream Petroleum Regulatory Commission shows that Africa’s largest oil producer failed to consistently meet the 1.5 million barrels-per-day quota allocated by the Organization of the Petroleum Exporting Countries, even as global crude prices remained relatively supportive.
A Year of Missed Targets
Nigeria exceeded its quota only three times in 2025 in January, June, and July posting modest surpluses of between 10,000 and 40,000 barrels per day.
But the gains were outweighed by deficits recorded in nine other months. The sharpest drop came in September, when output fell to 1.39 million barrels per day, leaving a daily gap of roughly 110,000 barrels.
Across those nine underperforming months, cumulative losses reached about 18.7 million barrels. After adjusting for the limited surpluses earlier in the year, the net production deficit for 2025 stood at 16.85 million barrels.
The trend extended into 2026. In January, production averaged 1.459 million barrels per day, 41,000 barrels below quota pushing the total shortfall for the 13-month period to approximately 18.12 million barrels.
The Revenue Impact
Using average monthly price data for Bonny Light crude from the Central Bank of Nigeria, which placed the benchmark at roughly $72.08 per barrel over the 10-month review period, the missed 18.12 million barrels translate to about $1.31 billion in unrealised revenue.
Converted at an exchange rate of N1,353 to the dollar, the figure amounts to approximately N1.76 trillion in potential earnings not captured.
This shortfall occurred even though Nigeria produced an estimated 530.41 million barrels in 2025, generating gross inflows of about N55.5 trillion at prevailing prices and exchange rates.
Analysts caution that the revenue estimate reflects gross value and does not factor in production costs, joint venture obligations, cost recovery under production-sharing contracts, domestic supply commitments, or losses linked to oil theft.
Industry observers say the recurring gap between targets and actual output underscores deep-rooted challenges in the oil sector. These include infrastructure constraints, operational disruptions, pipeline vandalism, security concerns in producing regions, and inconsistent field performance.
Budget Risks and Future Projections
The production slump raises fresh concerns for Nigeria’s 2026 fiscal outlook. The Federal Government has benchmarked daily oil output crude and condensate combined at 1.84 million barrels per day, with a reference price of $64.85 per barrel and an exchange rate assumption of N1,400 per dollar.
However, January’s output below quota signals a cautious start to the new budget year.
According to OPEC’s latest market report, Nigeria pumped around 1.46 million barrels per day in January 2026, slightly higher than December’s level but still below the agreed cap marking the sixth consecutive month of non-compliance.
Reform Promises
The new leadership at the Nigerian Upstream Petroleum Regulatory Commission has pledged to reverse the trend. The Commission says its strategy will focus on three priorities: production optimisation, faster and more predictable regulation, and safer, more sustainable operations.
These goals align with President Bola Tinubu’s broader ambition to raise Nigeria’s crude output to 2 million barrels per day by 2027 and 3 million barrels per day by 2030.
For now, however, the data tells a sobering story: even with supportive oil prices, Nigeria’s inability to consistently meet its OPEC quota continues to carry a steep financial cost one that could shape fiscal stability in the months ahead.
