July 21, 2024

2023 Budget: Nigerian Senate, Reps approve $75/b crude oil benchmark, reduce output target to 1.69mbpd


Oredola Adeola

The Senate and House of Representatives have anchored the N21.82 trillion, 2023 appropriation bill on a crude oil price benchmark of $75 per barrel, raising the benchmark by $2/b, above the $73 per barrel earlier proposed by President Muhammadu Buhari in October 2022, but agreed on the daily oil production target of 1.69mbpd.

The approval followed the consideration and approval of the report of both chambers’ committees on appropriation on Wednesday.

EnergyDay’s check showed that the approved oil price assumption for 2023 was higher than the oil price benchmark of $ 57 billion per barrel adopted in the 2022 budget.

The daily oil production target of 1.69mbpd for 2023 fiscal year Appropriation was lower than the 1.88 million b/d output target that the government had set for the 2022 fiscal year.

The parliament also projected a 17.16% inflation rate in the 2023 fiscal year.

Despite the production target Nigeria has struggled for many years to benefit from the $100 global crude oil increase recorded in the year.

Crude oil exports account for around 80% of Nigeria’s foreign exchange revenue, the country has suffered a huge revenue shortfall arising from lower crude oil production which dropped to about 9,000bpd in 2022.

Nigerian National Petroleum Company Limited (NNPCL) had in a report on the sideline of the declining output rate revealed that crude oil theft was taking a severe toll on its performance.

Mallam Mele Kyari, Group Chief Executive Officer of NNPCL, disclosed that the Corporation lost 470,000 barrels of crude oil per day, estimated at about $700 million monthly, amidst persistent crude oil theft, pipeline vandalism, short-in and organised security challenges hindering the country from attaining its 2.2 million b/d of crude and condensate capacity.

The country’s daily crude oil production output had managed to marginally increase to a daily average of 1.41 million barrels in November 2022, based on data obtained by EnergyDay from the Nigerian Upstream Petroleum Regulatory Commission(NUPRC).

The 1.41mbpd output figure for November, according to the Commission, was made up of crude oil volumes of 1,185,604 barrels, plus blended condensates at 40,691 barrels and unblended condensates at 187,799 barrels.

The country’s crude oil volumes for October 2022 were 1,014,485, blended condensates were 28,232 and unblended condensates were 187,655, amounting to 1,230,372 barrels per day.

The country made an output recovery in November after plunging to an average of 937,766 bpd in September, after more than five months of consecutive production decline as production decline from January, February, March, April, and May, averaged 1.39 million bpd, 1.25 million bpd, 1.24 million bpd, 1.22 million bpd, and 1.02 million bpd, respectively.

The output decline continued from May through June and July recording 1.16 million bpd and 1.08 million bpd respectively.

In August 2022 output dropped to 972,394 bpd, attributed to an attack on Forcados terminal, Bonny, Brass, and ten other crude oil terminals in the country out of Nigeria’s 29 terminals.

The marginal recovery recorded by Nigeria between October and November was credited to the combative actions launched by the NNPCL in collaboration with the security operatives against crude oil theft perpetrators Shell Petroleum Development Company of Nigeria Limited (SPDC) had in a statement confirmed the resumption of crude oil export operations after the completion of essential repairs at the Forcados Oil Terminal.

This significant effort was achieved after the disconnection and removal of active illegal connections to SPDC joint venture’s production lines and facilities in the western Niger Delta as well as the inactive illegal connection to the onshore section of the 48” Forcados Export Line.

The government’s offensive action against the crude oil criminals led to the successful discovery of 638 out of 763 illegal refineries.

Meanwhile, Bala Wunti, the Chief Upstream Investment Officer at the NNPC Upstream Investment Management Services (NUIMS) in a recent statement at the 11th Practical Nigerian Content Forum revealed that the country’s crude oil output as of December 6 is 1.59 million barrels per day.

Therefore EnergyDay gathered that if the gains made with the clamp down on crude oil thieves and the resumption of Shell’s Forcados export lines are sustained, Nigeria is likely to achieve 1.8 million b/d production out, if not more.

The country also stands the chance to earn more revenues to service its budget as Goldman Sachs has said Brent oil prices could reach $100 per bbl by this summer, up from the $50 range we saw in 2019.

Nigeria’s most valued grade, Bonny Light Crude Oil (BLCO) , was $81.48 per barrel, in an upward push towards the $100 mark predicted by Goldman Sachs.


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