The contribution of the oil and gas sector to the Nigerian economy declined significantly in the second quarter of 2013, as revenue accruable to the Federal Government from the sector dipped by N35.7 billion.
The Central Bank of Nigeria, CBN’s Economic Report for the Second Quarter of 2013, revealed that oil revenue dropped by 1.93 per cent from N1.849 trillion to N1.814 trillion at the end of the second quarter.
A breakdown of the gross oil revenue for the period showed:
•crude oil/gas sales depreciated by N35.3 billion or 8.04 per cent to N403.8 billion from N439.1 billion at the beginning of the quarter.
•Petroleum Profit Tax, PPT/Royalties depreciated by N57.1 billion or 5.54 per cent to end the quarter at N973.1 billion.
•Decline in crude oil production and export by N307 billion -production dropped by 8.87 million or N150 billion, while export dipped by 9.32 million about N157 billion.
The CBN blamed the development on incessant pipeline vandalism, resulting from crude oil theft in the Niger Delta.
Cordros Capital, in its Nigerian Macroeconomic Outlook, July to December 2013, warned that a further decline in the price of oil in the international market would make Nigeria’s fiscal position unsustainable.
Cordros analysts — Paul Maliki, Adaeze Usoh and Muyiwa Bamgbade, Head, Strategy and Research, Senior Analyst and Analyst respectively, said they expect Nigeria’s growth to average 6.8 per cent in the second half of 2013.
This revises their Gross Domestic Product, GDP, growth outlook from the earlier 7–7.5 per cent to 6.5-7 per cent for 2013.
“The key drivers of growth will be the implementation of critical structural reforms essentially within the oil and gas and power sector. Governments must equally demonstrate commitment to fiscal responsibility,” they stated.
Also speaking, analysts at Asset & Resource Management Company Limited, said: “Amidst continuous crude oil theft, we expect crude oil production to range between 2 – 2.2 million barrels per day for rest of 2013.
“Though we see distinct risks of more production outages in the second half of the year, we believe the net effect on overall production will be minimal as others are lifted simultaneously.
“Based on average crude oil prices of $105 per barrel in second half 2013, we estimate crude oil sales to N1.3 trillion, with royalties and Petroleum Profit Tax tracking ahead at around N1.8 trillion.
“Nonetheless, we expect lower quarter-on-quarter average oil prices of $105 per barrel versus $115 per barrel in first quarter 2013, to limit the impact of the recovery on crude oil sales.
“We estimate that the second quarter 2013 crude sales to come in around N600 billion, about 40 per cent less than budget estimate.
“We also believe that the foregoing will also impact PPT and royalties, which should see theseitems, come in lower than the actual figures reported in first quarter 2013, but ahead of budget estimates.”
Oil, gas production
The CBN report put the country’s crude oil production, including condensates and natural gas liquids, at 1.93 million barrels per day (mbd) or 175.63 million barrels compared with 2.05 mbd or 184.5 million barrels in Q1. This represents a decline in production of 0.12 mbd or 5.9 per cent.
Crude oil export was estimated at 1.48 mbd or 134.68 million barrels in the review period, compared with 1.60 mbd or 144.0 in the preceding quarter, thus representing a decline of 7.5 per cent.
The allocation of crude oil for domestic consumption was put at 0.45 mbd or 40.95 million barrels during the period under review.
Continuing, the CBN said: “At an estimated average of US$105.24 per barrel, the price of Nigeria’s reference crude, the Bonny Light (37º API), fell by 8.8 per cent, from the level in the preceding quarter. The average prices of other competing crudes, namely the U.K Brent and the Forcados also declined to US$103.14 and US$106.46 per barrel, respectively, from US$113.68 and US$116.89 per barrel in the preceding quarter.The West Texas Intermediate (WTI) at US$93.97 per barrel recorded a slight increase of 3.2 per cent.
“At 3,521.0 MW/h, estimated average electricity generation increased by 0.9 per cent, compared with the level attained in the preceding quarter. The development was attributable largely to the improvement in hydro power generation as a result of increase in water levels.
“At 3,012.0 MW/h, estimated average electricity consumption increased by 0.5 per cent, compared with the level attained in the preceding quarter. The development was attributed to the increased power supply, owing to the improvement in electricity generation.”
Information from Vanguard was used in this report.