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Maikanti Baru, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), disclosed last Wednesday, at the 19th CERAWeek Conference, that Nigeria still has over 41 billion barrels of untapped crude oil reserves.
Based on this data and with the level of daily production, the country’s proven oil reserves—the 11th largest in the world, will inevitably be exhausted in 59 years. In other words, after the next 15 four-year government tenures, or 15 presidential inauguration ceremonies, there may be no crude oil left to sustain Nigeria’s economy.
The current global oil price is $66.1 per barrel (OPEC Basket). If alongside this figure we take into account that the cost of producing one barrel of oil is stated as over $20 according to Group Chief Executive Officer of Oilserv Limited, Emeka Okwuosa, it means Nigeria’s oil reserves can fetch up to a total of $1.89 trillion (N576.5 trillion) till they are eventually used up.
This is enough to fund the budget of Nigeria for another 65 years, using the proposed total expenditures for the 2019 fiscal year (N8.83 trillion).
Experts, in the past, have however estimated that the reserves will dry up at a much earlier date. In 2016, Nosa Omorodion, president of the Nigerian National Association of Petroleum Explorationists (NAPE), said the crude oil reserves may dry up in the next 30 years and called for further exploratory activities. This was in view of the fact, based on figures from the NNPC, Nigeria’s oil production had dropped from 37 billion barrels to 28.2 billion.
His position was echoed a year later by minister of state for petroleum resources Ibe Kachikwu, who put the estimate between 25 and 30 years. Nigeria’s estimated oil and gas reserves have however since risen, especially with fresh discoveries of recoverable crude oil resource. Consequently, 2017 data from the Department of Petroleum Resources showed that the country was left with 55 years of production.
The realisation that Nigeria’s natural oil supply is limited has pushed the government to increasingly pay attention to revenue from the non-oil sectors, but progress has been slow.
For the proposed 2017 budget of N7.3 trillion, oil revenue was projected to be N2 trillion while non-oil revenue was estimated as N1.4 trillion. In 2018, the total revenue from oil was N3 trillion while N4.1 trillion accrued from other sectors; and for 2019, N3.7 trillion is expected from oil and N3.2 trillion from non-oil revenue.
The shape of the country’s economy is strongly dependent on endlessly fluctuating global oil prices.
Udoma Udoma, the minister of budget and national planning, had said about the 2018 budget that 41.7 per cent of the funding were expected from oil revenue alone and hopes were placed on an expected rice in price.
For the proposed 2019 budget, there is a $60 per barrel benchmark for economic planning; and so lower oil prices in previous weeks led to concerns among analysts regarding the projection. Brent Crude as at December 25 sold at $50.77 and only rose above $60 on January 11. Bonny Light from Nigeria was $52.72 on December 28, rose above $60 on January 10, and has since been wavering.
Though in the fourth quarter of 2018, the oil sector contributed to only 7.06 per cent of the country’s Gross Domestic Product according to the National Bureau of Statistics, in the first quarter of the same year oil exports comprised up to 87.7 per cent of total exports from Nigeria.