Nigeria’s projected revenue from oil sales in the 2020 budget may come under threats if the country’s crude production level continues its current downward trend.
Crude oil production by Nigeria fell for the third month in a row in December 2019 to a new low of 1.5m bpd, against a target product level of 2.18 million bpd at $57 per barrel, used in the budget. Oil currently sells at about $63 per barrel.
In the 2020 budget, the federal government projected about N3.73 trillion as oil revenues out of total revenue of N8.1 trillion.
The country’s output declined by 95,000 bpd between November and December, according to Organization of Petroleum Exporting Countries (OPEC) figures.
Nigeria’s crude production in December was in line with its OPEC quota of 1.77mn bpd. In the month of October, Nigeria recorded an oil production of 1.78 million bpd which decreased from 1.87 million bpd in September.
“It’s actually production decline and not restraint; we can’t really do much more than that. The numbers will get worse pretty soon without new projects to compensate,” Charles Akinbobola, an energy analyst at Lagos-based Sofidam Capital said.
“Producing below the OPEC production quota and below the benchmark of 2.18 million bpd is not good for Nigeria’s revenue,” Akinbobola added.