Can Nigeria sustain oil production rise?

Nigeria's oil production has surged to 1.35 million barrels per day in August, according to the latest OPEC Monthly Oil Market Report. The increase of 45,000 barrels per day from the previous month has sparked cautious optimism among industry experts, including Temitope Kolade, Senior Manager of the Oil, Gas, and Power Unit at Andersen Nigeria. Kolade joined CNBC Africa to discuss this uptick in production and its implications for the country's oil sector. While the figure falls short of Nigeria's target of 2 million barrels per day, the gradual rise signals a positive trend for the industry. Kolade highlighted the need to celebrate small victories and remain hopeful for continued growth in the coming months. With fluctuating global oil prices, currently standing at around $70 per barrel for Brent and $69 per barrel for West Texas Intermediate, Nigeria faces potential revenue challenges. The uncertainty surrounding US inventories and geopolitical issues in Libya add to the volatility in oil markets. Despite these challenges, Kolade predicts prices will likely hover within a $10 range in the short to medium term. Looking closer to home, the impending commencement of petrol lifting by the Dangote Refinery has raised concerns among oil marketers. The lack of a clear pricing template has created a level of uncertainty in the market. While the Nigerian National Petroleum Corporation (NNPC) plans to start lifting petrol from the refinery on September 15, questions linger about the pricing mechanism. Kolade explained that the transition to full deregulation could lead to a convergence of prices between imported products and those from local refineries like Dangote. This shift could impact the overall pricing structure in the market and potentially influence consumer costs. In response to calls for more local refineries to boost supply and moderate prices, Kolade emphasized the strategic importance of smaller refineries coming online. He noted that these facilities, primarily located in the Niger Delta and Southeast regions, could play a vital role in enhancing competition and ensuring market sustainability. As Nigeria explores alternative energy sources and transitions towards cleaner technologies, the window of opportunity for local refineries to thrive has never been more crucial. Amid evolving industry dynamics and global market fluctuations, Nigeria's oil sector stands at a crossroads, balancing production growth aspirations with pricing uncertainties and the imperative for diversified energy solutions.