Despite rising oil prices, Nigeria’s 2016 budget may be hurt by low production levels, the Organisation of Petroleum Exporting Countries (OPEC) has confirmed.
On Wednesday, Brent crude – global crude oil benchmark – rose to $39.73, improving Nigeria’s budget benchmark by over one dollar on every barrel of crude pumped.
The benchmark for 2016 is set at $38 per barrel for a production level of 2.2 million barrels per day.
Though oil prices have surpassed the budget benchmark over the past week, the low production levels experienced in Nigeria over the past two months will reduce government revenue.
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According to OPEC’s Monthly Oil Market Report (MOMR), Nigeria’s oil production fell by about an average of 100,000 barrel per day and is responsible for the fall in OPEC production levels.
“According to secondary sources, total OPEC crude oil production in February averaged 32.38 mb/d, – a decrease of 175 tb/d over the previous month,” the report read.
“Crude oil output decreased mostly from Iraq, Nigeria and UAE, while production increased in Iran, Saudi Arabia and Kuwait.”
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According to secondary sources highlighted by OPEC, Nigeria’s production levels fell by 94,200 barrels per day to a daily production of 1.754 million barrels.
However, direct communications with Nigeria shows that the country’s production levels fell by over 123,000 barrels in February, to close produce at 1.881 million barrels per day.
The foregoing shows that Nigeria is at least 319,000 barrels short of its expected daily production, translating to $12.122 million loss in revenue on a daily basis.
At this production levels, government revenue may experience a deficit of $4.4 billion (N871 billion), threatening the availability of resources for implementation of budget 2016.
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The budget, which is expected to be passed on Thursday, March 17, and has been in the eye of many controversies, may be hurt by these latest developments.
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