The Organisation
of Petroleum
Exporting
Countries (OPEC)
reduced shipment
of crude oil is
expected to
squeeze Nigeria’s 2013 budget
assumptions.
The oil cartel will reduce oil
shipments through to early
February as late winter demand
fails to materialise in Asia,
according to a research firm and
tanker tracker, Oil Movements.
The research firm says OPEC will
export 23.7 million barrels a day in
the four weeks to February 9,
down 150,000 barrels, or 0.6
percent, from the previous period.
BusinessDay reported last week
that Nigeria’s budget projections
may fail to materialise as a major
revenue risk faced in 2013 will be
achieving and sustaining the
optimistic crude oil production
targets set in the budget
document.
The National Assembly passed a
N4.987 trillion budget for 2013
last December based on oil
production of 2.5 million barrel per
day; however, the crude oil
production assumption contained
in the 2013 budget was never
achieved in 2012.
Crude oil exports provide 90
percent of foreign exchange (FX)
earnings and over 70 percent of
the Federal Government budget.
“There are concerns about the
ambitious output assumption of
2.53 million barrels per day”, Razia
Khan, regional head of research,
Africa, at Standard Chartered Bank,
said in a note on Nigeria’s 2013
outlook.
“Despite recent success in boosting
output, Nigerian production
frequently falls below this level,
and ‘augmentation’ from Nigeria’s
excess crude savings (ECA) may be
needed if output disappoints”.
Nigeria’s ECA is supposed to
contain savings over the budgeted
benchmark oil price of $79 as
passed by the National Assembly
for 2013.
It had $9.6 billion in it at the end
of 2012 down from over $20
billion in 2007.
The 2013 budget has a deficit
projection of N887 billion (US$5.69
billion), which is to be financed
from government’s domestic
borrowing, a planned $1.0 billion
eurobond issue in 2013 and
proceeds from the privatisation of
power assets.