13 December 2011, Sweetcrude, ABUJA – Nigeria plans a vigorous oil exploration in 2012, according to a budget speech by President Goodluck Jonathan at the National Assembly Tuesday.
The Budget calls for an oil production level of 2.48 million barrels per day (mbd) for the year and the benchmark oil price revised downwards from $75 per barrel to $70 per barrel.
“From 2012, there will also be a robust programme to strengthen our oil reserves base, and increase oil exploration activities in identified inland sedimentary basins, outside the Niger Delta, with the requisite potential for the production of oil and gas, particularly the Chad Basin,” read a written copy of Jonathan’s speech.
Jonathan cited fluctuations in oil prices in recent years and global economic woes, especially in the Eurozone, as reasons why the Budget was more cautious.
He said: “We are living witnesses to the extent of volatility that can afflict the international oil market with prices plummeting from $147 per barrel in July 2008 to about $38 per barrel four months later. Thus, although the oil price is currently over $100 per barrel, there is no guarantee what it would be in the future.
“We cannot subject the well-being of Nigerians to such large fluctuations and must therefore protect ourselves by managing our finances prudently including by adopting a conservative benchmark oil price for our budgets.”
Jonathan said the non-oil has been the main driver of growth in the country. Te economy grew by 7.72% in the second quarter of 2011, as against a forecast of 5.2% for Sub-Saharan Africa.
Contributions from the oil and gas sector also continued to improve, however, with production up from 2.35mbd in the second quarter last year to 2.45mbd in the equivalent period this year.
He argued: “You will agree with me that 2010 and 2011 Budgets were relatively expansionary, and we must now inject a dose of caution.”
The petroleum sector has been allocated resources of 59.66 billion Nigerian naira ($367 million) for 2012 where the country’s GDP is expected to grow 7.2% and inflation 9.5%.
A credit risk management initiative has also been set up to provide partial risk guarantees to “give comfort to gas producers in respect of payment”, while from the end of January equipment and machinery in the power sector will be exempted from duty.
Jonathan also urged the National Assembly to ensure the passage of the controversial Petroleum Industry Bill, which was designed to make the country’s oil industry more lucrative and attractive to outside investment. But, it has stalled at the National Assembly, as the last session of the Assembly failed to pass it while the current Assembly say it is yet to be furnished with the Bill.