Report: Amid Low Production, Oil Revenues Dropped 66% in Q3, 2023

Emmanuel Addeh in Abuja

Amid Nigeria’s continuing low crude oil production, expected revenues from the sector slumped by 66.2 per cent in the third quarter of 2023, the Central Bank of Nigeria (CBN) Economic Report has indicated.

Whereas N2.4 trillion of inflows was supposed to come in, according to the report, N814 billion was eventually received as revenues from the sector from which Nigeria earns over 90 per cent of its foreign exchange.

However, the inflow from the oil sector was a 0.6 per cent increment compared to the previous Q2, the report stated.

Nigeria has been unable to meet its Organisation of Petroleum Exporting Countries (OPEC) quota since at least the last three years, a development it blames on crude oil theft, pipeline vandalism and outright sabotage of critical assets in the Niger Delta.

Besides, as countries find alternative sources to fossil fuels and the race for NetZero begins in earnest, investment in the oil and gas sector has continued to wane, with powerful countries and civil society organisations piling pressure on investors to refrain from enabling more carbon emissions.

Despite government’s efforts over the years to end the menace, including the collaboration with local security groups, a whistle-blower policy, destruction of so-called illegal refineries, among others, they have tended to defy all kinds of solutions.

But the report noted that the muffled receipts were made worse by Nigeria’s oil production deficit, which it disclosed hit as much as 532,000 barrels per day during the quarter under review.

A further breakdown of the data by THISDAY showed that with the 532,000 bpd under-production spanning 92 days in July, August and September, the country lost as much as 48.9 million barrels in Q3.

“Non-oil revenue continued to dominate federation revenue, accounting for 83.0 per cent, while oil revenue made up the balance of 17.0 per cent. Driven by receipts from Production Sharing Contract (PSC) and dividends from the Nigerian National Petroleum Company Limited (NNPC), oil revenue, at N814.23 billion, rose by 0.6 per cent above the level in the preceding quarter, but was below the target of N2.410 trillion by 66.2 per cent,” the report said.

But despite the low crude oil output, compared with previous quarters, domestic crude oil production rose following the resumption of on loadings from the Forcados export terminal, and improved surveillance of oil infrastructure in the oil producing regions, the report stated.

Nigeria’s average crude oil production rose by 5.23 per cent to 1.21 million bpd from 1.15 million bpd in the preceding quarter, the CBN report added.

“The rise was due, mainly, to the improved surveillance of oil infrastructure which helped to increase production from Bonny, Erha, Okoro, Otakikpo, Yoho, Sea Eagle and Nembe streams. Nigeria’s production level, however, was lower than its OPEC quota of 1.742 million bpd, by 532,000 bpd in Q32023,” the CBN data added.

Although at N4.791 trillion, Federation Account receipt exceeded the level in Q2, 2023 by 50.1 per cent, but the CBN document stated it was still below the benchmark by 9.5 per cent.

“The improved performance reflected higher receipts from Company Income Tax (CIT), Customs & Excise Duties and Value-Added Tax (VAT), Production Sharing Contract (PSC), and the 2023 interim dividend declaration by the NNPC.

“The non-oil revenue, at N3.977 trillion, was 66.9 per cent above the level in the preceding quarter and exceeded the target by 38.0 per cent, reflecting higher collections of CIT, Custom & Excise Duties, and VAT.

“The increase in receipts were driven by improved economic activities, seasonality in tax returns, particularly CIT; and improved efficiency in tax administration, “the report added.

 The report stated that total world crude oil supply decreased marginally in Q3, 2023, as Saudi Arabia and Russia, extended their voluntary production cuts.

Also, during the period, world crude oil supply decreased by 0.1 per cent to 101.18 million barrels per day, compared with 101.31 million bpd in the preceding quarter.

“During the period under review, the average spot price of Nigeria’s reference crude oil, the Bonny Light, rose by 12.7 per cent to $89.90 per barrel, from $79.78 in the preceding quarter.

“The prices of Brent was $87.13, Forcados was $90.08, WTI was $83.61 while the OPEC Reference Basket was $87.64,” it added.

Nigeria has a budget of over N28 trillion this year, with an oil production benchmark of 1.78 million bpd and price per barrel of $77.96. However, OPEC’s quota for Nigeria in 2024 is 1.5 million bpd.