The Nigerian National Petroleum Corporation (NNPC) has said the Federal Government’s 2.3 million barrels per day crude oil projection for the 2018 Budget is achievable and realistic.
Group General Manager, Corporate Planning and Strategy, Mr. Bala Wunti, made this submission on Monday during a presentation to the House of Representatives Joint Committee on 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) at the National Assembly Complex in Abuja.
Mr. Wunti said the current production capacity for the country was more than 2.3 million barrels per day, noting, however, that due to the insecurity in the Niger Delta region, the full production capacity has not been achieved over the years.
“The 2018 crude oil national production projection for Joint Ventures, Modified Carry Arrangement or External Financing, Production Sharing Contracts, Independents, Marginal Fields and Service Contracts is about 2,298,000 barrels per day,” Mr. Wunti said.
He added that the 2018 price projection on the long term price assumption was based on price scenarios of $35 (low), $45 (medium) and $55 (high), stressing that most price forecasting agencies thought that the medium price scenario had the highest probability of occurrence which the 2018 budget was hinged upon.
“Consequently, a conservative price projection of $45 per barrel was used as benchmark for crude price for 2018 budget,” Mr. Wunti stated.
Speaking on the 2017 performance of crude oil production from January to October, Mr. Wunti averred that the average performance stood at 1,885,000 barrels per day which is equivalent to about 86 per cent of the budgeted 2.2 million barrels per day.
According to him, performance shortfall was mostly due to Niger Delta security related factors and vandalism of key export infrastructure, including Trans-Forcados Pipeline (TFP), Forcados Oil Terminal (FOT) export line, Nembe Creek Trunk Line (NCTL) and Trans Niger Pipeline (TNP).
He said robust engagement of stakeholders in the Niger Delta by the Federal Government and the NNPC had led to improved production in recent months, disclosing that sustained peace in the Niger Delta, price recovery and improved Joint Venture production would help to support government revenue aspirations.
Mr. Wunti noted that the average crude oil price performance between January and October 2017 was $52.49 barrels per day, an equivalent of 18 per cent over performance of budget price benchmark of $44.50 barrels per day.
The Chief Strategist of the NNPC said the 18 per cent above budget benchmark was due to a stability in the crude oil market and various geopolitical dynamics around the world.
He observed that the outlook was reassuring given the positive global economic growth and the improved compliance with the Organization of the Petroleum Exporting Countries’ (OPEC) production cut, adding that the incident of oversupply remains an issue.