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Oil price drops to $48, $12 below 2019 budget benchmark

By Udeme Akpan & Prince Okafor
L
AGOS—The price of crude oil, yesterday, dropped from $50 to $48 in the international market, showing $12 below Nigeria’s $60 per barrel 2019 budget reference price.

Specifically, the price of Brent, West Texas Intermediate, WTI and the Organisation of Petroleum Exporting Countries, OPEC, basket of 15 crudes stood at $48.00, $43.38 and $47.92 per barrel respectively.

Oil money

This means that the government projections, especially total revenue projection and expenditure in the budget may not be realised, should the volatility continue in the market.

This came as there are indications that Nigeria’s Egina oil will hit the global oil market in February, 2019, according to loading programme.

The loading programme obtained by Vanguard showed that the first cargo of the oil grade will be lifted by stakeholders, including Total, Nigerian National Petroleum Corporation, NNPC, and China National Offshore Oil Corporation, CNOOC.

Total spokesman, Mr. Charles Ebereonwu, restated in a telephone interview with Vanguard yesterday, that efforts were being made by the company to deliver first oil before the end of December, 2018.

Before then, the company had stated that Egina was important, especially as it would add additional 200,000 barrel per day to its output.

It will be recalled that in his Buhari budget breakdown obtained by Vanguard yesterday, President Muhammadu Buhari stated: “As a responsible administration, we will continue to monitor the situation and will respond to any changes in the international oil price outlook for 2019.”

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He said: “The 2019 budget proposal is intended to further place the economy on the path of inclusive, diversified and sustainable growth in order to continue to lift significant numbers of our citizens out of poverty.

“The underlying drivers of the 2019 revenue projections have been adjusted to reflect current realities. On the expenditure side, allocations to Ministries, Departments and Agencies of Government were guided by the 3 objectives of the ERGP, which are, (i) Restoring and Sustaining Growth; (ii) Investing in our People and (iii) Building a Globally Competitive Economy.

“The 2019 Budget proposal is based on the oil price benchmark of $60 per barrel. Oil production estimate of 2.3 million barrels per day, including condensates. Exchange rate of N305/$. Real GDP growth of 3.01 percent; and inflation Rate of 9.98 percent.

“Notwithstanding the recent softening in international oil prices, the considered view of most reputable analysts is that the downward trend in oil prices in recent months is not necessarily reflective of the outlook for 2019.

“With regard to oil production, I have directed the NPPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day.”

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