54 years on, Nigeria still digging for OPEC gold

Fifty-four years after signing on to OPEC’s lofty promises of collective bargaining and fair pricing, Nigeria is still digging, not just for oil, but for the elusive dividends of belonging to one of the world’s most powerful clubs.

Endowed with some of the world’s biggest oil reserves, plenty of arable lands, Nigeria broke onto the global stage by aligning with the 12-member OPEC cartel in 1971 to take an active position in decisions on international energy demand and supply issues alongside most of the world’s biggest oil producers.

Nigeria and other OPEC members have, over the years, collectively agreed on how much oil to produce, and subsequently exert considerable influence on the global oil price to keep it relatively high to maximise profitability.

For instance, in 1973, the cartel was able to influence an oil boom which saw prices quadruple from $3 per barrel to $12 per barrel.

Also, between 2006 and 2009, the price of oil went from $74.59 to $109.25. Again, from 2010 to 2013, the price of oil rose from $84.24 to $100.95.

Read also: Managing Nigeria’s oil output gains ahead of OPEC quota review

During these boom periods, most oil-producing countries run successful economies and also learned not to put all their eggs in one basket by intensifying plans for life beyond crude oil, a point Africa’s biggest oil-producing country missed.

Saudi Arabia, the world’s biggest oil exporter, took full advantage of the sustained rising oil prices to build new cities. The projects were designed to burnish the country’s image, develop a non-oil economy and generate enough employment to maintain social stability.

For the United Arab Emirates (UAE), building an economy less dependent on the ups and downs of the price of oil, but with a skilled workforce in many different industries, is beyond lip service. The country has a development plan for the next 50 years known as ‘2020: Towards the next 50.’

The plan aims to strengthen the country’s investment in future generations with a focus on advanced technology. It also aims to rely less on oil by diversifying exports and imports, enhancing cohesion in societies, improving the productivity of the national economy and building on Emirati values for the benefit of future generations.

In Norway, the government viewed oil revenue not as a source for immediate squandering but as a “transformation of wealth, from a natural resource to financial wealth,” with consideration for the future by upholding an ethical obligation to share oil wealth with future generations.

For Nigeria, the narration is different. Policy missteps, wasteful spending and an inability to diversify away from petrol dollars or build a life after oil plan have restricted the country’s economy from attaining its full potential and have rendered it fully susceptible to the renowned ‘resource curse.’

“OPEC came at the right time for Nigeria who just ended a civil war and put the country on the global map, but the cartel is not responsible for how countries utilised the revenue,” a former chief executive of the National Planning Commission told BusinessDay.

Despite producing oil in commercial quantities for more than five decades, Nigeria’s oil production has never far exceeded the 2.3 million barrels a day achieved in 1979. Its oil output was insufficient to spark a Middle Eastern-style economic miracle back then; it’s woefully inadequate to attempt it now, thanks to an increasing population.

Oil production per capita

Data sourced by BusinessDay showed Nigeria today ranks among the lowest in oil production per capita among the world’s top 20 oil producers.

The low oil production per capita means Nigeria earns less oil revenue per citizen than virtually all its oil-exporting peers, limiting the government’s ability to fund infrastructure, health, education, or subsidies without accumulating debt.

Read also: Wale Tinubu joins global energy leaders at OPEC high-level roundtable

The country’s average crude output in 2024 was just 1.34 million barrels per day (bpd), according to OPEC’s 2025 Annual Statistical Bulletin (ASB), which pales in comparison to its population of 228 million.

That puts Nigeria’s production at a mere 0.006 barrels per person per day, less than one-tenth of Saudi Arabia’s 0.295 and far behind much smaller oil economies such as Kuwait, the United Arab Emirates, and even crisis-hit Venezuela.

In stark terms, Nigeria’s oil output per capita is closer to that of Equatorial Guinea, a nation of less than two million people, than to its OPEC peers with similar reserve levels.

“Nigeria’s oil has become a paradox; abundant in volume, but scarce in value,” said Ayo Bankole, energy economist at Sofidam Capital. “We are one of the few oil-rich countries where oil seems to deepen poverty rather than alleviate it.”

Even more concerning is Nigeria’s failure to meet its OPEC quota for most of the past decade. In 2024, the country was allocated a quota of 1.5 million bpd but consistently underperformed, producing about 160,000 bpd below target.

By contrast, smaller countries like Kuwait and the UAE consistently produce over three million bpd, while exporting refined petroleum products in growing volumes. Nigeria, on the other hand, continues to import most of its fuel despite possessing four state-owned refineries that had largely been comatose for years.

The paradox

Among OPEC’s 12 member states, Nigeria has the largest population by far, an estimated 228 million people in 2024. Yet its per capita GDP was just $824, the lowest in the bloc when compared with Saudi Arabia ($35,058), the UAE ($50,088), or even Algeria ($5,717).

This disparity becomes more evident when production per capita is calculated. With 1.34 million barrels produced daily for a population of 228 million, Nigeria’s oil production per capita is among the lowest in both OPEC and the world.

Theft, transition problem

Compounding the problem is Nigeria’s oil theft crisis, which reportedly sees 100,000 to 200,000 barrels daily siphoned. This not only erodes revenues but also discourages upstream investment. In 2024, Nigeria had only 31 active rigs, a modest figure considering its reserve base and historical capacity.

“If we don’t act urgently, we may be left with stranded oil and wasted decades,” Ken Ude, a senior adviser at the Lagos-based Centre for Development Studies.

2025 achievement

BusinessDay’s findings showed Nigeria’s oil sector reached a significant milestone this year, achieving and surpassing its OPEC production quota for the second month in May and June.

According to OPEC’s July 2025 Monthly Oil Market Report, Nigeria’s average daily crude oil production reached 1.505 million barrels per day (bpd) in June 2025, a 3.6 percent increase from May and the highest level since January, and more than 15 percent growth.

“This achievement comes after years of underperformance due to oil theft, sabotage, and under-investment,” said Paul Arinze, an energy policy and investment specialist.

Arinze said, “Besides the COVID-19 period when every member had to swallow a deep cut to help shore up global oil prices, which had collapsed to zero at some point, Nigeria has had its quota reduced several times in response to its production reversals.”

Read also: $17.4trn global upstream investment required in five yrs to avoid market deficit – OPEC

Policy pivots: Too little, too late?

The Nigerian government has made efforts to reform the oil sector, including the passage of the Petroleum Industry Act (PIA) in 2021 and the recent executive orders aimed at reducing contract cycle times and incentivising investments.

These policies, however, are still in their infancy. Bureaucratic bottlenecks, regulatory overlap, and political interference continue to frustrate investors and delay progress. The hope that the PIA would usher in a new era of transparency and productivity is yet to fully materialise.

Recent moves by the Nigerian National Petroleum Company Ltd (NNPC) to attract private partners, revamp refineries, and secure oil pipelines offer a glimmer of hope. So too does the rise of modular refineries and the emergence of new players like Dangote Refinery, which is expected to eventually process 650,000 bpd, potentially reducing the country’s fuel import bill by $10 billion annually.