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The Nigerian government is counting on oil to help shore up the battered naira, and industry operators say it must decisively ramp up oil production to two million barrels per day (bpd) consistently to achieve that objective.

The country’s oil and gas sector, which has generated a significant chunk of government revenue and foreign exchange earnings for many years, is teetering and in desperate need of rescue.

The naira has hit record lows against the dollar and other major currencies following recent economic reforms, and the government is struggling to ramp up foreign exchange (FX) inflows due partly to low oil production.

Olusegun Omisakin, director of research and chief economist at the Nigeria Economic Summit Group, said Nigeria can’t get better when crude oil production is below two million barrels daily.

“We are barely touching what we have, you know. For some years now and currently, we are doing below two million barrels of oil production per day. We cannot continue to dream of a better country when we don’t know how to optimise our national resources,” Omisakin said at a quarterly macro-economic outlook webinar monitored by BusinessDay.

Security for oil assets, many analysts say, has not been treated with the seriousness it deserves, considering that oil is responsible for the nation’s revenue. Militants routinely kidnap oil workers, especially expatriates, and sabotage of oil pipelines occurs too frequently to absolve government officials, including security personnel, of collusion with criminals.

Some oil operators are also calling on the government to begin actively courting independent producers in the wake of the exodus of international oil companies (IOCs) from the Niger Delta’s land and shallow water assets.

Bolaji Ogundare, group executive director of Newcross Group and Pan Ocean Oil Corporation (Nigeria), in a recent interview, told BusinessDay that the future of Nigeria’s oil industry rests on investing in exploration.

“Investing in exploration is crucial for future growth and because it is risky and expensive. For exploration to take place, most companies need more incentives to do true exploration because, as we know, they are very high-risk and highly capital-intensive with million-dollar investments,” Ogundare said.

He added, “Achieving two million barrels, or better still 2.6 mbd of oil production, requires a long-term perspective, not just a short-term sprint that cannot be sustained year on year.”

For Atiku Bagudu, minister of budget and economic planning, Africa’s biggest oil producing country needs more than the proposed 2.3 million bpd of oil output, given its huge population and economic challenges.

According to Bagudu, Nigeria was producing about 2.3 million bpd of crude oil as far back as 25 years ago when it had a population of just over 100 million people.

“Not only that we need to be at 2.3 million bdp, we need to be higher because 25 years ago when our population was 119 million, we were doing 2.2 million bpd. But cumulative years of underinvestment, whether it’s security challenge or lack of production, has brought us to where we are,” Bagudu said on a live programme on TVC monitored by BusinessDay.

Golden age of stable exchange (N155-N156/$)

From 2011 to 2014, BusinessDay’s findings showed Nigeria experienced an economic boom fuelled by a thriving oil industry.

Brent, the benchmark of Nigeria’s crude oil, soared to an average of $109.75 per barrel, which helped the Central Bank of Nigeria (CBN) to maintain a largely stable currency, as the naira traded within a range of N155-156/$ between 2012 to 2014.

In 2014, Nigeria attracted the largest amount of foreign direct investment (FDI) of any African country, with inflows exceeding $22.1 billion. This influx of capital fuelled major projects, including deepwater exploration and development of new oil fields.