‘Increased Oil Production Will Drive Down Inflation’
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Loading... - Benjamin Iloh
- 09 Jan 2025
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The Society of Energy Editors (SEE) has forecasted significant advancements in Nigeria’s energy sector during the first quarter of 2025, bolstered by President Bola Ahmed Tinubu’s proposed budget of N49.7 trillion. This budget is anchored on an anticipated increase in crude oil production to 2.06 million barrels per day (bpd), which the SEE believes will stimulate economic growth and address critical national challenges.
The SEE predicts that the focus on boosting crude oil production will play a crucial role in reducing Nigeria's inflation rate, which currently stands at 34.6 percent. The association projects that, with successful implementation of the budget and increased oil output, inflation could be driven down to approximately 15 percent by the end of 2025.
In its report titled Nigeria Energy Outlook Q1, 2025, the society highlights several key areas to monitor within the energy sector, including:
- Oil exploration and production
- Domestic crude refining
- Gas production and liquefied natural gas (LNG) exports
- Power generation and transmission
- Labour relations
While the government’s goal to enhance crude oil production is ambitious, the SEE emphasizes that its success hinges on effectively addressing security issues in the Niger Delta region, which have historically hindered oil operations. The society notes that Nigeria plans to conduct a fresh oil licensing round in 2025, focusing on distributing undeveloped blocks as the country seeks to increase its crude reserves and production levels.
To ensure the new oil licensing round proceeds as planned, the Federal Government must demonstrate the necessary political will and commitment to overcoming existing challenges.
The SEE also points to the Dangote Refinery as a pivotal development that could significantly reduce fuel imports and alleviate the financial burden of petroleum subsidies. However, the society stresses that the consistent supply of crude oil feedstock from the Nigerian National Petroleum Company Limited (NNPCL) to the Dangote Refinery will be critical in determining the refinery’s economic impact throughout the year.
In summary, the Society of Energy Editors is optimistic about the potential for increased oil production to drive economic growth and reduce inflation in Nigeria. The success of these initiatives will depend on the government's ability to address security concerns in the Niger Delta, effectively manage the upcoming oil licensing round, and ensure a steady supply of crude oil to key refineries. As Nigeria navigates these challenges, the energy sector remains a focal point for national development and economic stability.
