Revenue from crude oil may drop further from the $41.8 billion in 2016 to $38.5 billion (N1.174 trillion) this year. At yesterday’s Brent crude price of $55.53 and with an improved production of 1.9 million barrels per day, the country is expected to earn N1.174 trillion by the end of 2017 if prices do not fall.
This is below the N1.985 trillion, which the Federal Government expects from crude oil sales to finance the 2017 budget. The current outlook will impact negatively the Federal Government’s capacity to deliver infrastructural projects, which have been mapped out for execution this year.
Stakeholders however say that a successful dialogue with Niger Delta militants to end pipeline bombings will determine the performance of this year’s budget and the country’s chances of getting out of the recession.
The Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor, stressed the need for the government to create opportunities for progress in the Niger Delta.
According to him, by creating opportunities for many, business can thrive and the security of lives and property can improve. President Muhammadu Buhari presented the 2017 Appropriation Bill to the National Assembly last month with projected oil revenue at N1.99 trillion, and price benchmark of $42.5 per barrel.
The projected crude oil revenue may even drop further, should the Federal Government fail to resolve the Niger Delta crises and increase production to the targeted 2.2 million barrels per day.
Decreased oil revenue from lower exports, coupled with the persistently low crude oil prices, have battered Nigeria’s economy, which slipped into recession in the second quarter of last year.
To revive Nigeria’s hydrocarbon resources, former President of Nigerian Association of Petroleum Explorationists, Nosa Omorodion, stressed the need to review and re-negotiate contracts; re-evaluate portfolios to understand why they are dormant or underperforming and take steps to guarantee reasonable return.
According to Omorodion who is also a Director, National Independents at Schlumberger, reduction in hydrocarbon exploration has resulted in declining oil and gas reserve base. “It is not rocket science to draw the conclusion that Nigeria’s aspiration of 40 billion barrels reserve base and 2.2 million barrels a day production quota is at best elusive.
“To make matters worse, increased competition from emerging African frontiers is impacting on Nigeria’s position in the industry,” he added. He said that government must seek more innovative and cost effective ways to increase reserves.
With the current slump in crude oil prices, Okoroafor said the time was ripe for aggressive exploratory activities to be encouraged, adding that about 77 exploratory wells were drilled in 1967, while only less than 20 were drilled in the last 10 years.
According to him, if the country had continued with the aggressive exploratory activities of 1967, the Federal Government would have achieved more than the four million barrels daily and 40 billion reserves targets set in 2010, which are yet to be achieved in 2016.
Besides, the Executive Director of the Nigeria Export Promotion Council Olusegun Awolowo has hinted that the country lost $30 billion from oil export in 2015. This he said contributed to the current economic recession, adding that the country needs an extra $30billion from the non-oil export to secure its future.
Awolowo said a total oil export of $70billion was achieved in 2014 and $40billion in 2015. He said though the figure for 2016 was not out yet, the country would not need any soothsayer to tell that it would be lesser than the previous year owing to the continued drop in the price of oil in the global market.
To fill the gap in the revenue lost, Awolowo said the country should scale up its non-oil sector revenue which was $2.7billion in 2014 and $1.6 billion in 2015. He said this at the meeting with Japanese businessmen in Nigeria who are desirous of expanding their investments in the non-oil sector.
Meanwhile, the Director-General of the Budget Office of the Federation, Mr. Ben Akabueze, has described the non-conformity with the budget calendar as the major challenge to the budget’s preparations and implementation.
Akabueze spoke yesterday in Abuja at a reform seminar series organised by the Bureau of Public Service Reforms [BPSR] in partnership with the World Bank.