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Nigeria’s May Oil Output High, Revenue Low

Despite actual five percent oil production increase in May, 2015, revenue flow to the federation account is still down by about 10 percent as oil prices fall below budget benchmarks.

Sopuruchi Onwuka

Revenue deficits from the export market continues to raise concerns about the integrity of the 2015 budget as rise in oil output fail to offset price drop at the international market. The Central Bank of Nigeria (CBN), disclosed in its April 2015 Monthly Economic Report that crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.91 million barrels per day (bpd) or 57.30 million barrels in April 2015. This represented an increase of five per cent above the level of 1.82 million barrels daily or 56.42 million bpd recorded in the preceding month. Crude oil export was estimated at 1.46 mbd or 43.80 million barrels in the month under review.

This also represented an increase of 6.6 per cent above the level recorded in the preceding month. Deliveries to the refineries for domestic consumption remained at 0.45 mbd or 13.50 million barrels during the review month. “At an estimated average of $59.55 per barrel, the price of Nigeria’s reference crude, the Bonny Light (37º API), rose further by 3.7 per cent above the level in the preceding month. The average prices of other competing crudes, namely the UK Brent at $58.18 per barrel; the West Texas Intermediate at $52.82 per barrel; and the Forcados at $59.88 per barrel, also showed similar trends as the Bonny Light. “The average price of OPEC’s basket of 11 crude streams, at $55.61 per barrel, indicated an increase of 5.7 per cent, but indicated a decline of 46.7 per cent, compared with the average of $52.61 and $104.27 per barrel recorded in the preceding month and the corresponding period of 2014, respectively,” the report added. Nonetheless, at N735.07 billion, the estimated federally collected revenue in April 2015, was lower than the monthly budget estimate by 9.8 per cent.

It was, however, higher than the receipt in the preceding month by 35.8 per cent. “At N286.24 billion or 38.9 per cent of total revenue, gross oil receipt was lower than the monthly budget estimate and the level in the preceding month by 36.8 and 21.5 per cent, respectively. The decline in oil receipts relative to the monthly budget estimate was attributable to the fall in receipts from crude oil and gas exports, occasioned by the drop in the price of crude oil in the international oil market. “At N448.83 billion or 61.1 per cent of the total revenue, gross non-oil receipts were above the monthly budget estimate and the level in the preceding month by 23.9 and 154.1 per cent, respectively.

The increase in non-oil revenue relative to the monthly budget estimate reflected largely, the increased receipts from the FGN Independent Revenue,” the report explained. Meanwhile Nigeria’s production performance in May plunged to 1.88 million barrels per day, according to figures on production from members of the Organization of Petroleum Exporting Countries (OPEC). According to the table, Nigeria’s production declined bu 20, 000 barrels per day in May falling from 1.90 million barrels per day (mbd) in April to 1.88 mbd. The table indicated a trend of fluctuation in the country’s oil production following a spate of relentless attacks on pipeline and subsequent downtimes as operators shut in production to repair damaged crude oil flow conduits. Platts figures and those of Central Bank of Nigeria (CBN) hardly agree accurately but they approximate each other and provide credible guides on the trends of production.

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