A Review of the Nigerian Energy Industry

Rising oil price: Nigeria increases 2018 budget oil benchmark by $6/b

*Oil exports.

OpeOluwani Akintayo

18 May 2018, Sweetcrude, Lagos — Following rising oil prices at the international market, the National Assembly on Wednesday increased oil benchmark in the 2018 budget from $45 per barrel to $51 per barrel. The increase was made while passing the Appropriation Bill into law.

According to the Senate Appropriation Committee Chairman, Danjuma Goje the increase of N6pb was done in collaboration with the Executive.

As a result, estimated expenditure proposed by the President Muhammadu Buhari six months ago was also raised to N9,120,334,988,225, an increase of N508 billion.

He further explained that the oil production level and exchange rate were left the way the Executive proposed.

The Appropriation Bill contained the estimates of revenue and expenditure totaling N8,612,236,953,214 made up of; Statutory Transfers N456,458,654,074;Debt Service N2,233,835,365, 699; Recurrent (Non-Debt) N3,494,277,820,219 and Contribution to Development Fund for Capital Expenditure N2,427,665,113,222.

Highlights of the budget as passed by the Senate included Aggregate expenditure N 9,120,334,988,225; Statutory Transfers N530,427,363,624; Debt Service 2,203,835,365,699; Recurrent Expenditure 3,512,677,902,077; Capital Expenditure 2,873,400,351,825 VI. Fiscal Deficit 1,954,464,993,775; Deficit to GDP 1.73%.

International oil benchmark, Brent hedged up to $80.03 per barrel on Thursday from $79.33 at previous closing.

Findings by SweetcrudeReport on Monday showed that Nigeria’s crude oil grade, Bonny Light, increased by $5.70 between March and April this year.

According to statistics from the newly released OPEC’s Monthly Oil Market Report, MOMR for May released on Monday, Bonny Light climbed from $67.05 in March to $72.75 in April, making it an 8.5 percent increase in price, thanks to the cuts by the Organisation of the Petroleum Exporting Countries, OPEC, and its partners.

Bonny Light sold for $53.75 in 2017, and $68.98 earlier this year.

The OPEC cuts which saw cutbacks of 1.8 million barrels per day of output, had achieved a 149 percent commitment in April, according to statistics by the Secretariat in Vienna.

Global oil glut is almost eliminated, according to OPEC, further supporting prices, and producers were cutting more than required under the deal.

According to the report, oil inventories in Organization for Economic Cooperation and Development, OECD industrialised nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.

“The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand,” OPEC said in its report.

The main goal of the supply deal was to reduce excess oil stocks to the five-year average.

However, despite extending the cuts twice, OPEC and its partners have shown further commitment to proceed with the Declaration of Cooperation, DoC, into 2019.

OPEC output rose by just 12,000 barrels per day (bpd) to 31.93 million bpd in April, according to figures OPEC collects from secondary sources. That is roughly 800,000 bpd less than the amount OPEC says the world needs from the group this year.

Figures reported directly from OPEC members showed even deeper declines in production.

Venezuela, whose output has plunged due to an economic crisis, told OPEC its production fell to 1.505 million bpd in April, believed to be the lowest in decades.

Top exporter Saudi Arabia told OPEC it cut output by 39,000 bpd to 9.868 million bpd, which is the lowest since the supply cut deal began, based on figures Riyadh reports to the group.

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