Nigeria’s low crude oil output have negatively impacted on the 2017 budget, with the FG stating that the country would be forced to cut down on some capital expenditures listed in the budget and also cut down cost.
Minister of State for Petroleum Resources, Mr. Ibe Kachikwu told newsmen on Thursday that for about four months since the passage of the 2017 budget, Nigeria had consistently produced below the 2.2 million barrels benchmark stated in the document, noting, however, that we are still a bit within the price range.
“In terms of the budget impact, we used 2.2 million barrels as the benchmark in the budget, and in terms of the price cap, we are still within range; obviously, we have lost quite a lot of months, about four months which we did not produce what the budget stipulated.
“There is definitely going to be differentials. Like you know, the Ministry of Finance is aggressively looking at ways to cover some of this shortfalls, part of that is efficiency; how do we cut down our expenditure so that even what we provided for in the budget in terms of expenses would also reduce.
“Obviously certain capital items would be affected. If we do not have money, we will not do certain capital items that we have in the budget.
“There is no gainsaying that the budget would be impacted. We are working hard in the Federal Executive Council to see how we can forecast or predict that sort of impact and see how we can cover that.”
He stated that despite the challenges Nigeria is facing, the country would voluntarily join in the production cap agreement reached between OPEC and some non-OPEC counties.
Kachikwu also revealed that Nigeria’s crude oil output currently stands at 1.7 million barrels and was still below the 1.8 million barrels benchmark set for it by OPEC.
“As a serious member of OPEC, we stand ready to support the cut, when we are sure that we can have a stable, predictable production. Yes we have gotten to these set of numbers, and which are still below the 1.8 million barrels that was used as benchmark for us in OPEC. But the reality is that this is a very difficult terrain, and you need to watch it for a couple of months to be sure that what you see is in fact sustained.
“I am not going to hide under the nine months exemption. I don’t think the whole idea of the exemption is for you to just stay away even when you reach your caps. Let us realise that for more than one and half years, Nigeria basically contributed a million barrels of non-production to this market. So in looking at when we need to begin to cut, we need to also take into cognisance that the economy hurt very badly, we went into triple quarters of recession over this issue and we continue to be in recession over this issue.
“Recovering that million barrels is going to take quite a bit of time, even when you get up production, you repair your pipeline, it takes a while to kick back production platform into full gear. Seeing this, I think our projection has always been that we would be able to manage this recovery, absent of every other attack, obviously, over a period of four to six months.”