… N1.99trn projected inflow suffers setback
By Adewale Sanyaolu
Nigeria’s crude oil export is expected to slide to 1.72 million barrels per day (bpd) according to latest loading programmes, dimming hopes of government’s N1.99 trillion projected oil revenue for the 2017 budget.
This was even as the Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, said the country’s oil production, excluding condensates, was slightly below 1.8 million bpd in July.
Kachikwu, while speaking on the sidelines of an event in the capital, Abuja, said there have been issues with ageing pipelines.
“We continued to have challenges, some of our pipelines are old, so these are basically technical. They are not militancy-induced stoppages but they are basically maintenance-induced stoppages,” he said.
Nigeria’s oil output has rebounded this year, aided by government efforts to placate militants in the Niger Delta region where the bulk of the country’s crude is produced, although it has struggled to maintain peak output levels.
Crude production in the country was cut by more than a third last year when militants carried out a series of attacks on energy facilities in the Niger Delta.
When asked whether Nigeria would agree to join OPEC’s production cap at the group’s November meeting, the Minister said, “I can’t disclose that.”
OPEC had agreed with several non-OPEC producers, led by Russia, to cut oil output by a combined 1.8 million bpd from January 2017 until the end of March 2018 where Libya and Nigeria were exempted from the limits to help their oil industries recover from years of disruptions.
Recall that President Muhammadu Buhari had last December, presented the N7.2 trillion 2017 Appropriation Bill to the National Assembly which raised to N7.44 trillion with projected oil revenue at N1.99 trillion, and price benchmark of $42.5 per barrel.
The projected crude oil revenue may even drop further should the Federal Government fail to resolve the Niger Delta crises and increase production to the targeted 2.2 million bpd.
But falling oil revenue from lower exports, coupled with the persistently low crude oil prices, have battered Nigeria’s economy, currently struggling with recession since the second quarter of last year.
However, to revive Nigeria’s hydrocarbon resources, former President of Nigerian Association of Petroleum Explorationists (NAPE), Mr. Nosa Omorodion, stressed the need to review and re-negotiate contracts; re-evaluate portfolios to understand why they are dormant or under-performing and take steps to guarantee reasonable return.
According to Omorodion who is also a Director, National Independents at Schlumberger, reduction in hydrocarbon exploration has resulted in declining oil and gas reserve base. “It is not rocket science to draw the conclusion that Nigeria’s aspiration of 40 billion barrels reserve base and 2.2 million barrels a day production quota is at best elusive.
“To make matters worse, increased competition from emerging African frontiers is impacting on Nigeria’s position in the industry,” he added. He said that government must seek more innovative and cost-effective ways to increase reserves.