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CBN Reports Shortfall in Q2 Crude Production

By on September 4, 2012

The central bank (CBN) said on Monday the country pumped 2.12 million barrels per day of oil in the second quarter, well below the 2.48 million bpd which the finance ministry has projected in this year’s budget.

The CBN said in its second quarter review of the economy published on its website that oil production had risen from an average of 2.06 million bpd in the first quarter.
Nigeria’s official oil figures normally come from the national bureau of statistics (NBS) but the central bank, the oil ministry and the state oil company sometimes give output figures on an ad hoc basis. Their numbers rarely match up.
If the central bank figures are correct, Nigeria needs a lift in 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 (ECA). But if production fails to meet projections, the government will need to take more money back from the ECA to meet the shortfall.

Finance Minister Ngozi Okonjo-Iweala told Reuters last month that when putting the budget together her ministry lowers the production projections given to them by the oil ministry.

She has pledged to increase the balance in the ECA to $10 billion by the end of the year, from around $7 billion now. If oil production figures underperform, Nigeria could be gambling on prices staying high to meet this pledge.
State-oil firm NNPC 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 is at record highs.

The central bank’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.

The NBS admits that its own official figures rely on data provided by NNPC, a state company rife with corruption which will be overhauled and partly privatised if parliament passes an energy law due to be debated later this month.

The ECA has been raided frequently by government in recent years. The account contained $20 billion before the 2007 general election but hovered around $3-$4 billion last year before Okonjo-Iweala began efforts to ramp up savings.