Oil Revenue Plummets by 72% as FG Misses Target in May

The Federal Government’s oil revenue target for May 2023 was missed by a wide margin, as the country earned only N223bn from oil exports, representing a 72 per cent reduction from the projected N804bn, according to the Central Bank of Nigeria’s Monthly Economic Report for May 2023 seen by The PUNCH on Wednesday.

The report attributed the shortfall in oil revenue to lower receipts from Petroleum Profit Tax and Royalties, as well as a decline in the prices of crude oil in the global market.

The report also revealed that the gross federation earnings dropped by 16 per cent to N837bn in May, from N998bn in April, and were 53 per cent below the budgeted N1.78 trillion.

The report said that non-oil revenue sources continued to dominate, accounting for 73.4 per cent of federation revenue in the review period.

However, non-oil receipt was also lower than the level in April by 5.4 per cent, and below the target by 36 per cent. The report blamed the lower collections from Company Income Tax, Value Added Tax, and Customs & Excise Duties, on the seasonality in the filing of tax returns by businesses in Nigeria.

The CBN report came on the heels of a similar report by Reuters, that the United States waterborne imports of crude from the Organization of the Petroleum Exporting Countries and its non-OPEC partners, dropped steadily over the last year, further tightening supplies in the U.S. while supporting other markets including Europe.

The report said that total U.S. crude waterborne imports averaged 2.47 million barrels per day in October, down from 2.92 million bpd in September, according to figures from data intelligence firm Kpler, with shipments falling from OPEC+ producers including Nigeria, Algeria and Saudi Arabia.

The CBN report also stated that earnings from crude oil weakened, due to a decline in the prices of crude oil, exacerbated by the United States’ debt situation.

It said: “Consequently, provisional data shows that crude oil and gas export receipts fell by 3.8 per cent to $4.06 billion, from $4.22 billion in April. A breakdown reveals that crude oil export receipts declined by 4.2 per cent to $3.58 billion, from $3.73 billion in the preceding month. Similarly, gas export receipts fell by 2.1 per cent to $0.49 billion, from $0.50 billion in April.”

The report added that the average spot price of Nigeria’s reference crude oil, the Bonny Light (34.9° API), dipped by 11.16 per cent to $76.91 per barrel, from $86.57 pb in the preceding month. It said that a decline was also recorded in the prices of UK Brent at $76.95 pb, Forcados at $77.24 pb, WTI at $72.34 pb, and OPEC Reference Basket at $75.70 pb.

The report, however, noted that domestic crude oil production rose to 1.18 million barrels per day, while crude oil export rose to 0.73 mbpd mainly due to the lifting of a force majeure by Exxon Mobil, following the suspension of industrial action by the workers’ union.

It said: “Data from the Nigerian Upstream Petroleum Regulatory Commission showed that Nigeria’s crude oil production rose by 19.2 per cent to 1.18 mbpd in May, from 0.99 mbpd in the preceding month. Of the 1.18 mbpd produced, 0.45 mbpd was allocated for domestic consumption, while 0.73 mbpd was exported. Nigeria’s production level remained below the OPEC monthly quota of 1.742 mbpd by 0.562 mbpd.”

The country has continued to experience low crude oil exploration after the COVID-19 pandemic, President, Nigerian Association of Petroleum Explorationists, Elliot Ibie told The PUNCH during a chat.

According to him, challenges of “security challenges, pipeline vandalism, oil theft and slowness in the implementation of the Petroleum Industry Act” need to be addressed for the country to witness a boost in its oil production and revenue. He also called for more investment and innovation in the oil and gas sector, as well as the diversification of the economy to reduce dependence on oil.

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