THE Nigerian budget funding largely benchmarked on crude oil production is under threat following a drop in the country’s crude oil production in March to 1.23 million barrels per day (bpd).
This figure is based on the latest daily data from the Organisation of Petroleum Exporting Countries (OPEC) monthly oil market report for March.
The figure shows a 92,000 barrel drop from the 1.32 million daily production in February 2024.
Read Also:
- OPEC’s resolution puts Nigeria’s projected 2024 oil revenue in doubt
- Stopping fossil fuel funding destroying African economy – OPEC
- OPEC cuts global oil demand forecast as crude oil production drops in October
According to the Federal Government’s 2024 budget, the oil price was benchmarked at US$77.96
Brent crude, selling at $92.09 per barrel, could have given Nigeria more money for its foreign exchange reserves, but the nation is not meeting its daily production target.
Crude oil proceeds form a greater percentage of revenue allocations to the Federation Account.
The sharp drop in oil production has persisted over time, with factors such as pipeline vandalism and crude oil theft responsible for the drop.
These occur despite the Nigerian National Petroleum Company’s engagement of the private security outfits, Tantita Security Services, to protect the country’s oil assets.
Economic watchers are concerned that the drop in oil production will affect Nigeria’s foreign exchange reserves and possibly affect the naira’s current appreciation in the foreign exchange market.
“Crude oil exports down, interesting and disappointing. We must face oil squarely. It is still our main revenue source. Agriculture is a medium to long-term. Crude oil and gas exports still contribute highest to our reserve,” a development economist, Kalu Aja, said.
With this development, federal, state, and local allocations are expected to drop, and Nigeria’s foreign exchange reserves could also drop.
“If we want the fiscal side to do well, we must stop the oil theft and improve on our oil revenue resources, improve lending to manufacturing, and ensure a stable exchange rate,” former Director-General of Lagos Chamber of Commerce (LCCI) Muda Yusuf told The ICIR
The country’s crude oil production in March was the lowest this year, falling below the benchmark of 1.78 million barrels daily set in the 2024 budget.
With this figure, Nigeria was displaced as the biggest oil producer in Africa as Libya produced a higher figure of 1.236 million bpd – a 5,000 barrel difference. This makes Libya the largest oil producer in Africa for March 2024.
The drop in crude oil production means lower receipts from oil sales and reduced foreign exchange for the federal government.
According to the report, Saudi Arabia maintained its position as the biggest oil producer among OPEC member countries, with an average daily production of 8.97 million bpd- a drop of 39,000 barrels. Iraq followed the Kingdom with 3.9 million bpd and the United Arab Emirates with 2.91 million barrels daily.
In March, the value of the OPEC Reference Basket (ORB) rose by $2.99, or 31.7 per cent, month over month, reaching an average of $84.22 per barrel.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.