Nigeria recorded 530,000bpd oil production shortfall in 2013 – Survey

Nigeria recorded a shortfall of over half a million barrels oil production daily in 2013, the country’s crude production statistics has revealed.
This average shortfall of about 530, 000 barrels per day was obtained by Bloomberg from records of daily production from the country compared with the 2.53 million barrels the federal government had predicted in the 2013 budget.
Nigeria, Africa’s biggest crude exporter depends largely on proceeds from crude to service over 85 per cent of its budget.
The country targeted, according to its financial plans for the year 2013, 2.53 million barrels per day production, a projection it failed to meet.

The Bloomberg’s survey, which blamed the foot-dragging on the passage of the Petroleum Industry Bill (PIB) for the inability to meet up with the production projection added that the bill will also take part in determining the success of the 2014 budget.
“Nigeria would not achieve a substantial increase in production until it passed the long-delayed Petroleum Industry Bill,” it said.
It stated that West Texas Intermediate crude for February delivery was currently trading at about $93 a barrel, compared with an oil price of $77.5 a barrel proposed in Nigeria’s 2014 budget.

In the same vein, the Global rating agency, Standard & Poor’s, S&P, also raised concerns that Nigeria’s crude oil production forecast of 2.39 million barrels a day in the 2014 budget, was over-estimated.

This, according to an analyst at S&P, Ravi Bhatia, was due to increased tension in the Niger Delta region and the forthcoming 2015 general elections.

“It’s a concern if they have a big rise in pre-election expenditure and there’s a big revision on the oil price or there is a production shortfall due to Niger Delta tensions. High global oil prices are helping to sustain the picture as it stands now,” he said.

Bhatia described as optimistic, the 2.39 million barrels a day projection put forward by the Presidency to the National Assembly

According to him, a $10 to $15 fall in the global oil price might change the fiscal equation for Nigeria, adding that ”the country is very sensitive to oil prices.”

He said Nigeria would not achieve a substantial increase in production until it passed the long-delayed PIB.

Bhatia noted that Nigeria’s Excess Crude Account had been drawn down quite significantly, adding though that it was still enough to provide a slight buffer.

The Federal Government is battling incessant oil theft and unrest in the Niger Delta, where most crude is pumped, while the Presidency had pledged to keep the budget deficit under control.

Nigeria is expected to save revenue from oil prices above that level in its Excess Crude Account.

The fund was holding less than $5 billion as of October, according to Finance Minister, Ngozi Okonjo-Iweala, down from $9 billion at the start of the year.

S&P raised Nigeria’s credit rating to BB-, three steps below investment grade, in November 2012 as its currency reserves increased with oil prices. It has a stable outlook.