CBN lowers revenue expectation from oil exports in 2024
…Declares N18.8billion as total trade balance in Q3 2023
The Central Bank of Nigeria (CBN) has lowered expectations for revenue from oil exports in 2024.
This is coming a day after the Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company (NNPC) Limited Mr. Mele Kyari assured of revenue generation and increased oil production during an interactive session with the Senate Committee on Finance at the National Assembly, Abuja, on Wednesday.
Speaking on the dynamics of the market in relation to the projected budget benchmark price of $77.96 per barrel, Kyari said, “With what we see in the market today and potentially in the year 2024 and even beyond the next two years, it is very unlikely to see $70 per barrel oil in the market. The oscillation we are seeing, sometimes you do see prices coming down to $75 to the barrel and sometimes it goes above it, overall, benchmarks are averages. We think that the proposal by Mr. President around the $77.96 is still realisable in 2024.”
On the crude oil production projection, he stated, “The number we have is 1.785mbpd. This is cumulative of all oil produced in the country. This figure is inclusive of all production including crude oil and condensate. I need to make this clarification because of the reports in the media that our OPEC quota is 1.5million barrels per day. The OPEC quota is related only to crude oil. We also do between 250,000 to 300,000 barrels per day of condensate in our production. When you combine the two, the 1.78mbpd is realistic and realisable.”
He expressed optimism that though there were challenges such as security and force majeure, the measures being deployed by the Federal Government would be able to take care of them to guarantee the projected level of production.
The GCEO also assured that NNPC Ltd. will maintain the level of dividends remittance to the Federation Account as stated in the Medium-Term Expenditure Framework, adding that the projected dividends from the Nigeria Liquefied Natural Gas Ltd. was also realisable and would be flowed directly into the Federation Account as stipulated by the law.
Speaking on Thursday in Abuja, the CBN Governor, Mr Olayemi Cardoso who appeared before the Senator Tokunbo Abiru led Senate Committee on Banking, Insurance and Other Financial Institutions projected less revenue from oil exports in the fiscal year.
“We expect less revenue from oil exports due to the production limit of 1.78mbpd in 2024. OPEC approved quota for Nigeria is 1.8mbpd, which is higher than the 2024 budget assumption.
“However, the country’s production has been below these thresholds. The budget benchmark for 2023 was 1.69mbpd , but the highest level of production during the year, was about 1.35mbpd in Q3 of 2023.”
“The reasons for the underperformance of the oil production target , include , crude oil theft and pipeline vandalization, production shut-ins and divestments by major oil companies.”
The CBN Governor also stated that the total trade from Nigerian Foreign Exchange Market (NFEM) stood at N18.804billion in the third quarter ( Q3) of 2023.
The CBN Governor explained to members of the joint committee from both chambers of the National Assembly, that the outlook for the domestic economy in Nigeria for 2024 is very positive as both the Inflation and Exchange rates would withstand fluctuating pressures on them and get stabilized.
Cardoso said, “The outlook for the domestic economy remains positive and is expected to maintain the positive trajectory for 2024.
“Inflation pressures may persist in the short term but are expected to decline in 2024. Exchange rate pressures are also expected to reduce significantly with the smooth functioning of foreign exchange market.”
The Governor informed the committee members that the unification of the exchange rate windows in June 2023, has ushered in a new approach to the management of the exchange rate, aimed at reducing arbitrage , rent seeking behaviour and speculation in the market.
He said, “The policy aims at creating a market where the demand and supply of foreign exchange determines the exchange rate.
“The premium has narrowed and our focus on increasing the autonomous FX supply, would lead to more stability and further narrowing of the premium.
“Total Trade in the third quarter of 2023, stood at N18.804.68billion. Exports were valued at N10.346.60billion while total imports stood at N8.457.68billion . This represents a positive trade balance, which would lead to an increase of the external reserves.”
