Oil benchmark battle may delay 2013 budget

The dispute over the oil benchmark for the 2013 budget may soon snowball into a big fight that could delay the passage and implementation of the budget.

President Goodluck Jonathan had presented the budget proposals to a joint session of the National Assembly explaining that his proposed $75 benchmark was expedient. The Senate had increased the benchmark to $78, arguing that the new benchmark would help government to reduce deficit and domestic borrowing, and increase spending. The House of Representatives insisted that it would not back down from its demand that the benchmark should be $80 per barrel of crude oil.

The aggregate value of the 2013 budget is N4.9tn. Out of the figure, N2.4tn is for recurrent expenditure. The sum of N1.5tn was voted for capital projects, while N591.7bn was earmarked for debt servicing. The balance of N380bn was set aside for statutory transfers.

Gunmen abduct Seven Expatriates on Chevron Facility

Seven expatriates working for oil servicing company and contractor to Chevron Nigeria Limited were abducted by gunmen at the Pennington oil platform in offshore Nigeria. The spokesman for the Joint Task Force (JTF) Operation Pulo Shield, Lt. Col. Onyema Nwachukwu, has confirmed the incident.

The seven expatriates are six Russians and one Estonian who were working aboard a vessel belonging to Bourbon International Oil Company when the gunmen invaded and took them away. No group has claimed responsibility for the action. The attacked vessel is known as Bourbon Liberty 249. The expatriates, according security sources, were part of a team of 15 workers when the pirates struck. The other eight workers who were unhurt during the operation had since been transferred to the Nigerian Port at Onne, Rivers State. The attacked vessel was believed to be sailing from the Pennington Offshore Terminal situated 16 miles south-west of the entrance to the Fishtown River.

The nearest community to the platform is said to be some coastal communities in Bayelsa State. Investigation revealed that the military high command has ordered all the Forward Operating Base (FOB) of the Nigerian Navy located in the Niger Delta to comb the entire area and fish out the kidnappers, a situation that has provoked tension along the coastal communities in the state.

Oil Benchmark: House, Okonjo-Iweala heading for collision

The row over the oil benchmark for the 2013 budget has continued with the House of Representatives calling on the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, to either obey the law or resign. According to the House, the minister’s insistence on the $75 per barrel oil benchmark breached the 2013-2015 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper passed by the House on October 9. The House had approved $80 as the oil benchmark for revenue projections in the 2013 budget under the MTEF.

The Chairman, House Committee on Finance, Dr. Abdulmunini Jibrin, said the MTEF was already a law that must be complied with just as the 2013 Appropriation Bill will pass through second reading today during plenary in the House.

However, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said the adoption of $75 as the oil benchmark for the 2013 Budget was to curb inflation. Okonjo-Iweala said a higher oil benchmark would not only lead to higher inflation but also a decline in the value of the naira and also lead to lower savings and reduced investment.

Nigeria & Saudi account for the bulk September OPEC Oil Output drop

Crude oil output from the Organization of Petroleum Exporting Countries (OPEC) fell by 390,000 barrels per day (b/d) to 31.15 million b/d in September, with Saudi Arabia and Nigeria accounting for the bulk of the month-on-month drop. This follows August production of 31.54 million b/d and leaves OPEC overproducing its 30 million b/d ceiling by 1.15 million b/d.  

According to a Platts survey of OPEC and oil industry officials and analysts, Saudi Arabia pumped an average 9.85 million b/d in September, 150,000 b/d lower than August's 10 million b/d, a level it had maintained since May. Nigerian output was down by 230,000 b/d at 2.05 million b/d in September from 2.28 million b/d in August, the survey estimated.

In Angola, maintenance helped push volumes down to 1.7 million b/d from 1.75 million b/d in August. Other smaller decreases came from Algeria, Qatar, and the United Arab Emirates (UAE).
The only countries to increase output were Iraq, whose exports climbed further in September, and Libya. Iraqi output was estimated at 3.18 million, up 80,000 b/d from August, and Libyan output at 1.48 million b/d, up 30,000 b/d from August.
In recent months rising Iraqi production has set a series of post-1990 records, but the September figure of 3.18 million b/d surpasses even anything seen in 1990 and is the biggest recorded since Platts started thorough monthly surveys of OPEC production in March 1988.
Ecuador, Kuwait and Venezuela maintained production at August levels.

Iran's oil exports steady despite sanctions – Iran OPEC Governor

Iran’s OPEC Governor Mohammad-Ali Khatibi has said the oil exports of Iran have remained steady in recent months despite sanctions. The International Energy Agency (IEA) had earlier said in a report that Iran's oil exports fell to 860,000 barrels per day (bpd) in September. The figure was 2.2 million bpd in December 2011.

Dismissing the IEA report, Khatibi said Iran's oil exports are the same as previous months and the situation is stable.  Khatibi denied that Iran's oil buyers are limited to few countries. Khatibi, who is also the director of the National Iranian Oil Company, said Iran's oil exports are at their normal level and are unaffected by Western embargoes.

The UN Security Council imposed four rounds of sanctions on Iran between 2006 and 2010 over its refusal to halt its nuclear enrichment program, which Western countries suspect could be used to develop nuclear weapons. The U.S and European Union have imposed and expanded sanctions of their own over the years despite Tehran's insistence on the peaceful nature of its nuclear program.

The EU imposed an oil embargo on Tehran on July 1, and is mulling over another round of sanctions on Iran's natural gas exports to the block.