Budget 2012: Oil production below projection

The Central Bank of Nigeria’s 2012 Q2 report has revealed that the volume of oil pumped in the second quarter of 2012 fell below the projected volume stipulated in this year’s budget. According to the CBN, Nigeria pumped 2.12 million barrels per day of oil in Q2, a volume that was  16.98 per cent below  the 2.48 million bpd,  which the government had projected in this year’s budget.

The report, which was published on the bank’s website, noted that oil production had risen from an average of 2.06 million bpd in the first quarter.

If the current figures by the apex bank are correct, then Nigeria may have to increase its output in the second half of the year to fund all the spending in this year’s budget without taking on more debt or lowering its oil savings rate.

The benchmark oil price in the budget was $72 a barrel, well below the market price and above which Nigeria is supposed to save extra revenues in the Excess Crude Account. But if production fails to meet projections, government will need to take more money back from the ECA to meet the shortfall.

The Nigerian National Petroleum Corporation said last month that crude oil production reached an all-time high of 2.7 million bpd. But industry experts have questioned these figures, which are at the top end of Nigeria’s capacity and come during a period when oil theft by criminal gangs was at record highs. The CBN’s oil output data usually comes in lower than figures from the NNPC and the oil ministry, who both have an interest in showing progress in the industry’s performance, although they also have the best access to the data.