Nigeria's oil exports soar to 2.2 mm bpd in January

Feb 10, 2010 01:00 AM

Cumulative crude oil export from Nigeria averaged 2.2 mm bpd in the first month of the year, nearly 100 % of the 1.2 mm bpd in January 2009. The figure excludes production retained for internal refining but now battered by the Nigerian National Petroleum Corporation for refined products due to domestic refining capacity outage.
The figure dropped by the Minister of Petroleum Resources, Dr Rilwan Lukman, indicated production plateau since the third quarter of last year when the Department of Petroleum Resources (DPR) also posted production from all units at the same rate. However, confirmation of the actual export figures as against output figures by the Central bank of Nigeria is being awaited to measure the actual revenue performance of the petroleum industry at the opening of the year.

Revenue receipts from export of crude oil and condensate account for over 95 % of total foreign exchange income of the country, over 90 % of total revenue support to the federal budget and over significant liquidity in the internal economy.
Dr Lukman, at a forum in Abuja, said Nigeria's oil production stabilized at 2.2 mm bpd, and attributed production recovery from the 2009 bottom below one mm bpd to Presidential amnesty packages for militants in the Niger Delta. He said the amnesty deal and the subsequent truce allowed the country to pump more oil, regretting however that inadequate funding for joint-venture projects remained a threat to optimization of output potentials. The Minister, while celebrating the nation's production recovery, was quick to point out that Nigeria has remained committed to its production ceiling of 1.704 mm bpd at the Organization of Petroleum Exporting Countries (OPEC).

Despite the quota which limits Nigeria to production of 1.7 mm bpd, the country has sustained production ramp up from 1.75 mm bpd in August, 1.85 mm bpd in September, 1.87 mm bpd in October, 1.9 mm bpd in November and 2.0 mm bpd in December.
But Dr Lukman insists that the actual crude oil output was within the confines of the OPEC output quota for the country, explaining that the rest of the production and export was condensate. He said condensate, a natural gas liquid used in blending crude oil to get a lighter and sweeter grade, was not included in the output restriction by OPEC, adding that the commodity accounted for the bulk of the nation's over production.

Before the downturn in the activities of the petroleum industry due to militant activities in the Niger Delta, Nigeria was pressing for increased OPEC quota to reflect her rising profile in reserves and production capacity.
The nation's petroleum industry is under a policy mandate to raise cumulative crude oil reserves to 40 bn barrels and production to 4.0 bpd. However, meeting the aspiration has been fraught with funding, security and fiscal issues as the industry wheels around a critical reform bend.

The Petroleum Industry Bill, evolved to address most of the problems through a reform process is criticized by the investing operators who complain that the fiscal terms proposed in the bill were too tight to recommend the required investments. The bill also proposed to phase out the government's burden of funding equity interests in joint ventures through incorporation of the joint ventures to be financially autonomous, and migration of similar agreements to production sharing contracts.
Meanwhile the 2010 cash call provision for the joint ventures, expected to be the last one to appear in the federal budget, has continued to generate issues between the NNPC and the National Assembly over jumps in the figures.

Lukman said the $ 5 bn proposed in the 2010 budget for funding government's equity interests in the joint ventures was not enough to fund proposed projects. He reiterated the need for alternative sources of financing.
But in a different presentation, the Nigerian National Petroleum Corporation (NNPC) stated that over $ 10 bn was proposed for 2010 cash call response to meet funding commitment to joint venture and gas pipeline projects in the year. The chairman of Senate Committee on Petroleum, Mr Lee Maeba, on January 28 had queried the $ 5 bn earmarked for joint venture cash calls and accused NNPC of failing to provide crucial details and the breakdown of the proposed spending.

Senator Maeba said the Senate would soon pass a resolution to compel NNPC to provide the required information.
"There is an increase in the budget of some of your parastatals like the Department of Petroleum Resources (DPR) and others but we have not seen any justification for spending the public money," Maeba was quoted as saying. Maeba also reiterated the commitment of the Senate to approve major reforms to the oil and gas sector when it passes Nigeria's Petroleum Industry Bill (PIB), which covers both upstream and downstream operations. It includes changes to existing production sharing agreements between the government and international oil companies.

But Maeba urged Lukman to provide details on both the proposed spending and a policy framework for the development of the local industry in the 2010 budget proposal.
Industry sources also have warned that the 2010 spending program falls short if Nigeria is being realistic about expansion of its oil production.

Source / Daily Champion
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