How Nigeria will meet 2018 budget target despite OPEC oil cap – Kachikwu

Ibe Kachikwu
Ibe Kachikwu [Photo Credit: THISDAYLIVE]

Last Thursday’s Organization of Petroleum Exporting Countries, OPEC, resolution extending by another nine months its 2017 output cut agreement will not affect the Nigerian government’s revenue projections in the 2018 Budget, the Minister of State for Petroleum Resources, Ibe Kachikwu, has said.

Mr. Kachikwu, who stated this on Friday in an exclusive chat with PREMIUM TIMES, said Nigeria was capable of meeting and exceeding the 2.3 million barrels per day crude oil production and oil revenue benchmarks in the proposed 2018 budget before the National Assembly for approval.

Although Nigeria was one of the “soft” targets exempted from the final resolution by members to undertake adjustment of about 1.2 million BPD for six months, Mr. Kachikwu, who led the country’s delegation to the Vienna meeting, said Nigeria was expected to produce about 1.8 million BPD.

The other soft target, Libya, is expected to account for another one million barrels daily, to enable them recover fully from the negative impact of disruptions in their operations from attacks by militants in their countries.

Analysts observed that the 1.8 million BPD production cap may trigger a review of the fundamentals in the 2018 Budget, as it fell short of the proposed oil output benchmark by about 27.8 per cent.

But Mr. Kachikwu told PREMIUM TIMES there was no cause for concern, as the country was on course to meet and exceed all its targets during the 2018 fiscal year.

“First, the 1.8 million barrels per day was not a cap fixed for Nigeria by OPEC, but an expectation,” he explained. He did not elaborate.

“Also, Nigeria’s oil output does not include condensate production of 350,000 barrels per day. So, between 1.8 million BPD and 350,000 BPD, we (Nigeria) are doing 2.2 million barrels per day. We can produce more than the 1.8 million BPD if we have the capacity.”

Nigeria is the only OPEC member producing a special blend of crude oil, “Sweet Crude”, with condensate, whose production is not covered by OPEC regulation and output computation.

The Group General Manager, Corporate Planning and Strategy, Bala Wunti, told the House of Representatives Joint Committee on 2018-2020 Medium Term Expenditure Framework, MTEF, and Fiscal Strategy Paper, FSP that the country’s average daily oil production was currently about 1.885 million BPD.

“The 2018 national crude oil production projection for Joint Ventures, Modified Carry Arrangement, MCA, or External Financing, Production Sharing Contracts, PSCs, Independents, Marginal Fields and Service Contracts, SCs is about 2.298 million BPD,” Mr. Wunti said.

Apart from the country’s production capacity, Mr. Kachikwu said Nigeria was equally banking on the prospects of increased revenue as a result of anticipated improvement in global oil prices, to balance whatever funding gaps in the budgetary projections.

In the proposed N8.6 trillion ‘Budget of Consolidation’ presented by President Muhammadu Buhari to the National Assembly for approval, crude oil benchmark price was put at an average of N45 per barrel, based on low benchmark price of $35, medium ($45) and high ($55) scenarios.

Just as OPEC announced its latest resolution to extend the output cut agreement, crude oil price at the international market jumped from about $61.41 to above $62 per barrels, about $17, or about 37.8 per cent in excess of the proposed N45 price in the budget.

Mr. Kachikwu said with the current intervention by the OPEC to stabilise the global oil market, there were prospects that prices would stay above the budgeted benchmark, to enable Nigeria cover whatever revenue gaps in the budget.

To benefit maximally from the current production exemption and to encourage and improve upstream investment, the Minster said the country would continue to push joint venture upstream operating companies to reduce production cost per barrel.


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  • Ubong

    When we were told categorically by VP Osibanjo that as minister of state of the federation, your leaked memo to the President was a tissie of fabrications. We were told you do not understand contracts and its procurement processes. Your ill feelings about senior appointments made by your subordinate BARU was settled by you being asked to keep shut and accept to remain as roving minister and probably reporting to Baru. Now you are telling us about budget financing. Are you sure you have cinsulted with the regional lords before this latest comment or you understand the word budget and its meaning. God bless Nigeria

    • Hogg

      @ubonganang:disqus;

      Ibe Kachikwu should learn how to
      speak and sound less reckless and more educated. He talks as if this
      400,000 barrels loss of crude oil per day will not affect Nigeria. That is
      nonsense talk. Premium Times calculates this cut as over as 27.8% loss of daily
      revenue at $60 per barrel. The loutish talk by Ibe Kachikwu is not the meaning
      of confidence-building, but instead a folly to suggest that Nigeria did not
      need 27.8% of its daily crude oil revenue hitherto and thus should not have
      ever been granted cut-exemption by OPEC in the first place. The real problem
      with Nigeria’s government officials is that they can’t think clearly.

  • thusspokez

    Mr. Kachikwu, who stated this on Friday in an exclusive chat with PREMIUM TIMES, said Nigeria was capable of meeting and exceeding the 2.3 million barrels per day crude oil production and oil revenue benchmarks in the proposed 2018 budget before the National Assembly for approval.

    Only a few day ago, the Director General of Budget Office was telling Nigerians that he plan on selling off the family silver — including the National Arts Theatre — to help pay for the 20181. Is this still necessary if the government will be able to produce enough oil for the budge?

    • Hogg

      @thusspokez:disqus

      “The Oman minister said that Nigeria had agreed to cap output at 1.8 million barrels per day”
      ………………FOX NEWS

      Ibe Kachikwu should sound less reckless and more educated. He talks as if this 400,000 barrels loss
      of crude oil per day will not affect Nigeria. That is nonsense talk. Premium Times calculates this cut
      as over as 27.8% loss of daily revenue at $60 per barrel. The loutish talk by Ibe Kachikwu is not the
      meaning of confidence-building, but instead a folly to suggest that Nigeria did not need 27.8% of its

      daily crude oil revenue hitherto and thus should not have ever been granted cut-exemption by OPEC

      in the first place. The real problem with Nigeria’s government officials is that they can’t think clearly.

      • thusspokez

        daily revenue at $60 per barrel

        Who in their right mind would in 2017 calculate daily revenue at $60? The last year oil price reached $60 was in 2014.

        • K. Kanti

          @disqus_mI7EKRGTND:disqus

          My brother, i hear you. But see the facts. Nigeria will lose 400,000 barrels of crude oil every day,
          after OPEC cut Nigeria’s crude oil production. That loss is there – fixed. Whatever price increase
          in the price of crude oil from now will not go into the budget above the $45 (not 45 Naira price on
          which Nigerian budget is based for the year 2018). Are you getting me now? Any price above $45
          will instead go to EXCESS CRUDE ACCOUNT. That means the real 2018 budget of Nigeria is dead.

          • thusspokez

            Nigeria will lose 400,000 barrels of crude oil every day, after OPEC cut Nigeria’s crude oil production.

            Where did you get the information that OPEC is cutting Nigeria’s oil production?

            That means the real 2018 budget of Nigeria is dead

            No it is not dead as your assumption about OPEC cutting Nigeria’s oil production is false.

            The problem with the 2018 budget is that it is too ambitious. It is an increase of 16 percent over the 2017 budget. And I am wondering how the government plans to raise the 16% increase in revenue to pay for it?

      • Timothy

        Please read the article very carefully…..

        …..In the proposed N8.6 trillion ‘Budget of Consolidation’ presented by President Muhammadu Buhari to the National Assembly for approval, crude oil benchmark price was put at an average of N45 per barrel, based on low benchmark price of $35, medium ($45) and high ($55) scenarios……….

        ……..Just as OPEC announced its latest resolution to extend the output cut agreement, crude oil price at the international market jumped from about $61.41 to above $62 per barrels, about $17, or about 37.8 per cent in excess of the proposed N45 price in the budget……………

        …….Mr. Kachikwu said with the current intervention by the OPEC to stabilise the global oil market, there were prospects that prices would stay above the budgeted benchmark, to enable Nigeria cover whatever revenue gaps in the budget………….

        Clearly this makes more sense than just reading the headlines alone.