Budget 2017: FG, OPEC differ on oil output
.OPEC: You produce 1.4mbpd; Nigeria: We do 2.2mbpd
•OPEC crying more than the bereaved, says Senate spokesman
•NNPC set to resume exploration in Chad Basin.
Implementation of the 2017 budget recently passed by the Senate may be a huge challenge, following disagreement between the Organisation of Petroleum Exporting Countries, OPEC, and the Federal Government over Nigeria’s oil output.
While OPEC is claiming that Nigeria’s actual oil production presently stands at 1.484 million bpd, the Federal Government is laying claims to 2.2 million bpd.
The budget was based on the production of 2.2 million barrels per day at the reference price of $42.5 per barrel in the global market, a benchmark the executive used in preparing the budget. The National Assembly raised the benchmark to $44.5 when it passed the Appropriation Bill last week.
Incidentally, Kachikwu’s telephone was switched off when Vanguard called repeatedly for comments yesterday.
The Group General Manager, Group Public Affairs of the Nigerian National Petroleum Corporation, Mr. Ndu Ughamadu, could also not be reached for comments.
However, spokesmen of the Senate and House of Representatives, Sabi Abdullahi and Abdulrazaq Namdas respectively, expressed confidence that oil production and revenue projection targets would be met.
President Muhammadu Buhari (M) presenting the 2017 National Budget to a joint session of the National Assembly at the National Assembly Complex in Abuja.
But a source in the Corporation, who preferred not to be named, explained that the government considered both crude oil and condensates in its calculation of Nigeria’s output.
He indicated that condensate was not always considered as part of the output of OPEC member states.
“It should be noted that OPEC does not consider Condensate as part of members output which explains why its figures may be lower. But as a nation we do because Nigeria produces commercial quantity of Condensate.”
“A company like ExxonMobil produces commercial quantity of Condensate which is exported to generate substantial foreign exchange for the nation. It is when the two – crude oil and Condensate – are added that our output increases to over 2.2 million bpd,” he added.
The Chairman, Senate Committee on Media and Public Affairs, Senator Sabi Abdullahi said the Senate was confident that oil production and revenue projections would be met.
“We are working towards achieving oil production and revenue targets which explains why we injected N10 billion to fund the Amnesty Programme to ensure that there was relative peace in the Niger Delta as that would continue to boost oil production in the Niger Delta.
“The assumptions are achievable, there is no danger as far as we are concerned, no one should dictate for us, OPEC should not be more Catholic than the Pope,” he added.
Nigeria, other producers
However, OPEC stated in its report that the output of Angola dropped to 1.651 million bpd in April, from 1.652 million bpd in the previous month.
The report showed that Saudi Arabia, the biggest producer in the group, recorded the second largest increase in April as it produced 9.946 million bpd, after recording a slide from 9.9 million bpd in March.
Also, the output of Kuwait, rose by 10,000 bpd to 2.710 million bpd, while the output of United Arab Emirates increased by 15,000 bpd to 2.988 million bpd in April.
The report stated that, “crude oil production declined in the UAE, Libya, Iraq and Iran, but increased in Angola and Saudi Arabia. The world oil supply in 2016 averaged 95.82m bpd, representing an increase of 0.34m bpd compared to a year ago. The relatively weaker oil prices, lower investment and cuts in International Oil Companies, IOCs’ capital expenditure, Capex, led to a decline of 0.42m bpd in non-OPEC output, particularly the US oil production, which was partially balanced by higher OPEC crude oil output of 0.95m bpd.
“Estimates are based on preliminary data for non-OPEC supply, direct communication for OPEC NGLs and non-conventional liquids, and secondary sources for OPEC crude oil production. World oil demand in 2016 was revised higher by 65m bpd to reflect the most recent data. Total world oil demand growth for 2016 stood at 1.44 mbpd to average 95.12 mb/d.
“For 2017, oil demand growth is anticipated to be around 1.27 mb/d unchanged from the previous report with total oil demand expected at 96.38 mb/d. Non-Organization for Economic Co-operation and Development, OECD, will continue to lead growth at 1.04 mb/d, while OECD continues to grow albeit at a reduced pace of 0.23 mb/d,” it added.
NNPC to start exploration in Chad Basin
Meanwhile, the NNPC disclosed that the Nigerian Army has given “security clearance” to the corporation to resume oil and gas explorations in the Lake Chad Basin.
The Corporation stated this when a high-powered delegation of NNPC, led by Saidu Mohammed, the Chief Operation Officer for Gas and Oil, paid a courtesy visit on Governor Kashim Shettima of Borno State at Government House in Maiduguri.
“This will enable us plan and coordinate the full rehabilitation and integration of 2.6 million displaced persons from the Lake Chad region, before deploying our high technology oil and gas equipment, including three dimensional drilling system into Lake Chad Basin Areas.
“The resumption of oil exploration in this basin, is part of the efforts of NNPC to scale up and maintain the nation’s oil reserves, while daily crude oil, is to increase from current 1.3 million mbd to 2.4-3 mbpd. This is why we initiated the moves to get into the Lake Chad Basin for oil exploration, as we have spoken to the military authorities to commence exploration in the next six-eight weeks. We have assembled our drilling equipment with high technology,” he added.
He called on the community in the Lake Chad Basin to cooperate with NNPC, so that the targeted oil production and reserves could be achieved.
Responding, Governor Kashim Shettima assured that his administration will partner with NNPC to actualize its mission in the basin.
He said when the oil production and reserves targets are met; it will not only generate revenue, but create job opportunities for the unemployed youths in Northeast and the country at large.
He appealed to NNPC to assist the state government in the reconstruction and rebuilding of thousands of schools and public structures destroyed by insurgents.
He said the education sector remains the only means of fighting poverty, which is associated with emergence of Boko Haram insurgency.
He disclosed that the total value of destroyed houses, schools, public buildings, including health, water and power facilities in the North East, was $9.6 billion (N3.65 trillion), while Borno State incurred the sum of $5.6 billion (2.13 trillion).
The team also visited the Shehu of Borno, Alhaji Abubakar Garbai El- Kanemi at his palace, where the monarch seeks support of the NNPC in the ongoing reconstruction and resettlement of displaced persons in liberated communities.
Oil prices leap to $52 per barrel
Meanwhile, oil prices of many crude oil grades, including Nigeria’s bonny Light rose above $52 per barrel after Saudi Arabia and Russia indicated interest to support the elongation of supply cuts beyond 2017.
The current price level showed an excess of $9.5 per barrel against the nation’s $42.5 per barrel reference price of the 2017 budget.
Already, the Secretary-General of OPEC, Dr. Sanusi Barkindo stated that, “looking ahead, the general expectations for demand growth for crude and oil products in the coming months remain bullish, supported by anticipated firm economic performance across the world, as highlighted in the latest IMF World Economic Outlook, and the expected increase in demand for gasoline over the driving season, mainly in North America and Asia.
“Additionally, the return of refineries from seasonal maintenance, together with the high conformity observed in the OPEC and non-OPEC voluntary production adjustments, should enhance market stability and reduce volatility.
“For OPEC, the focus remains on conformity, which is being analyzed and monitored through a Joint Ministerial Monitoring Committee, the JMMC, and a supporting Joint Technical Committee, the JTC. These are vital for the transparency required to implement these decisions in a full and timely manner, on the core principles of equity and fairness. We remain confident that all 24 participating countries remain steadfast in honouring their commitments to individually achieve the 100 per cent level. This is our firm goal,” he added.
•OPEC crying more than the bereaved, says Senate spokesman
•NNPC set to resume exploration in Chad Basin.
Implementation of the 2017 budget recently passed by the Senate may be a huge challenge, following disagreement between the Organisation of Petroleum Exporting Countries, OPEC, and the Federal Government over Nigeria’s oil output.
While OPEC is claiming that Nigeria’s actual oil production presently stands at 1.484 million bpd, the Federal Government is laying claims to 2.2 million bpd.
The budget was based on the production of 2.2 million barrels per day at the reference price of $42.5 per barrel in the global market, a benchmark the executive used in preparing the budget. The National Assembly raised the benchmark to $44.5 when it passed the Appropriation Bill last week.
Incidentally, Kachikwu’s telephone was switched off when Vanguard called repeatedly for comments yesterday.
The Group General Manager, Group Public Affairs of the Nigerian National Petroleum Corporation, Mr. Ndu Ughamadu, could also not be reached for comments.
However, spokesmen of the Senate and House of Representatives, Sabi Abdullahi and Abdulrazaq Namdas respectively, expressed confidence that oil production and revenue projection targets would be met.
But a source in the Corporation, who preferred not to be named, explained that the government considered both crude oil and condensates in its calculation of Nigeria’s output.
He indicated that condensate was not always considered as part of the output of OPEC member states.
“It should be noted that OPEC does not consider Condensate as part of members output which explains why its figures may be lower. But as a nation we do because Nigeria produces commercial quantity of Condensate.”
“A company like ExxonMobil produces commercial quantity of Condensate which is exported to generate substantial foreign exchange for the nation. It is when the two – crude oil and Condensate – are added that our output increases to over 2.2 million bpd,” he added.
The Chairman, Senate Committee on Media and Public Affairs, Senator Sabi Abdullahi said the Senate was confident that oil production and revenue projections would be met.
“We are working towards achieving oil production and revenue targets which explains why we injected N10 billion to fund the Amnesty Programme to ensure that there was relative peace in the Niger Delta as that would continue to boost oil production in the Niger Delta.
“The assumptions are achievable, there is no danger as far as we are concerned, no one should dictate for us, OPEC should not be more Catholic than the Pope,” he added.
Nigeria, other producers
However, OPEC stated in its report that the output of Angola dropped to 1.651 million bpd in April, from 1.652 million bpd in the previous month.
The report showed that Saudi Arabia, the biggest producer in the group, recorded the second largest increase in April as it produced 9.946 million bpd, after recording a slide from 9.9 million bpd in March.
Also, the output of Kuwait, rose by 10,000 bpd to 2.710 million bpd, while the output of United Arab Emirates increased by 15,000 bpd to 2.988 million bpd in April.
The report stated that, “crude oil production declined in the UAE, Libya, Iraq and Iran, but increased in Angola and Saudi Arabia. The world oil supply in 2016 averaged 95.82m bpd, representing an increase of 0.34m bpd compared to a year ago. The relatively weaker oil prices, lower investment and cuts in International Oil Companies, IOCs’ capital expenditure, Capex, led to a decline of 0.42m bpd in non-OPEC output, particularly the US oil production, which was partially balanced by higher OPEC crude oil output of 0.95m bpd.
“Estimates are based on preliminary data for non-OPEC supply, direct communication for OPEC NGLs and non-conventional liquids, and secondary sources for OPEC crude oil production. World oil demand in 2016 was revised higher by 65m bpd to reflect the most recent data. Total world oil demand growth for 2016 stood at 1.44 mbpd to average 95.12 mb/d.
“For 2017, oil demand growth is anticipated to be around 1.27 mb/d unchanged from the previous report with total oil demand expected at 96.38 mb/d. Non-Organization for Economic Co-operation and Development, OECD, will continue to lead growth at 1.04 mb/d, while OECD continues to grow albeit at a reduced pace of 0.23 mb/d,” it added.
NNPC to start exploration in Chad Basin
Meanwhile, the NNPC disclosed that the Nigerian Army has given “security clearance” to the corporation to resume oil and gas explorations in the Lake Chad Basin.
The Corporation stated this when a high-powered delegation of NNPC, led by Saidu Mohammed, the Chief Operation Officer for Gas and Oil, paid a courtesy visit on Governor Kashim Shettima of Borno State at Government House in Maiduguri.
“This will enable us plan and coordinate the full rehabilitation and integration of 2.6 million displaced persons from the Lake Chad region, before deploying our high technology oil and gas equipment, including three dimensional drilling system into Lake Chad Basin Areas.
“The resumption of oil exploration in this basin, is part of the efforts of NNPC to scale up and maintain the nation’s oil reserves, while daily crude oil, is to increase from current 1.3 million mbd to 2.4-3 mbpd. This is why we initiated the moves to get into the Lake Chad Basin for oil exploration, as we have spoken to the military authorities to commence exploration in the next six-eight weeks. We have assembled our drilling equipment with high technology,” he added.
He called on the community in the Lake Chad Basin to cooperate with NNPC, so that the targeted oil production and reserves could be achieved.
Responding, Governor Kashim Shettima assured that his administration will partner with NNPC to actualize its mission in the basin.
He said when the oil production and reserves targets are met; it will not only generate revenue, but create job opportunities for the unemployed youths in Northeast and the country at large.
He appealed to NNPC to assist the state government in the reconstruction and rebuilding of thousands of schools and public structures destroyed by insurgents.
He said the education sector remains the only means of fighting poverty, which is associated with emergence of Boko Haram insurgency.
He disclosed that the total value of destroyed houses, schools, public buildings, including health, water and power facilities in the North East, was $9.6 billion (N3.65 trillion), while Borno State incurred the sum of $5.6 billion (2.13 trillion).
The team also visited the Shehu of Borno, Alhaji Abubakar Garbai El- Kanemi at his palace, where the monarch seeks support of the NNPC in the ongoing reconstruction and resettlement of displaced persons in liberated communities.
Oil prices leap to $52 per barrel
Meanwhile, oil prices of many crude oil grades, including Nigeria’s bonny Light rose above $52 per barrel after Saudi Arabia and Russia indicated interest to support the elongation of supply cuts beyond 2017.
The current price level showed an excess of $9.5 per barrel against the nation’s $42.5 per barrel reference price of the 2017 budget.
Already, the Secretary-General of OPEC, Dr. Sanusi Barkindo stated that, “looking ahead, the general expectations for demand growth for crude and oil products in the coming months remain bullish, supported by anticipated firm economic performance across the world, as highlighted in the latest IMF World Economic Outlook, and the expected increase in demand for gasoline over the driving season, mainly in North America and Asia.
“Additionally, the return of refineries from seasonal maintenance, together with the high conformity observed in the OPEC and non-OPEC voluntary production adjustments, should enhance market stability and reduce volatility.
“For OPEC, the focus remains on conformity, which is being analyzed and monitored through a Joint Ministerial Monitoring Committee, the JMMC, and a supporting Joint Technical Committee, the JTC. These are vital for the transparency required to implement these decisions in a full and timely manner, on the core principles of equity and fairness. We remain confident that all 24 participating countries remain steadfast in honouring their commitments to individually achieve the 100 per cent level. This is our firm goal,” he added.
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