BY MICHAEL EBOH

Nigeria lost $828.816 million, about N132.611 billion in one month, as the country’s crude oil production dropped by 7.44 million barrels in February 2014.

According to data obtained from the Central Bank of Nigeria, CBN, Economic Report for February 2014, Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.86 million barrels per day (mbd) or 52.08 million barrels in February.

Oil Installation

This is compared to production of 1.92mbd or 59.52 million barrels produced in January 2014, representing a decline of 7.44 million barrels for the month, 0.06mbd or 3.1 per cent.
Specifically, the CBN said, “At an estimated average of US$111.40 per barrel, the price of Nigeria’s reference crude, the Bonny Light (37º API), rose by 1.1 per cent above the level in the preceding month.

“The average prices of other competing crudes, namely the West Texas Intermediate at US$95.00 per barrel; the U.K Brent at US$109.77 per barrel; and the Forcados at US$112.26 per barrel also showed similar trend as the Bonny Light.”

The report further stated that deliveries to the refineries for domestic consumption remained at 0.45mbd or 12.6 million barrels during the month under review.

Also, Nigeria lost $678.426 million, as crude oil export for the month of February stood at 39.48 million barrels, dropping by 13.36 per cent or 6.09 million.
This is an average of 1.41 million barrels of crude oil per day, compared to an average of 1.47 million barrels per day in January,

Q1 review
Giving a review of the economy in the first quarter of 2014, analysts at Cowry Asset Management Limited, said the Nigerian economy faced a hoard of challenges, ranging from limited oil output due to pipeline vandalism and decreased production activities and low power generation due to gas shortage, among others.

On the outlook for the second quarter of the year, the analysts said, “Supply of foreign exchange is expected to come mainly from the central Bank of Nigeria, as current trend in supply from the oil majors’ monthly sales to commercial banks suggests a further reduction.

“However, we expect draw down on the external reserves due to import demand and payment for refined petroleum products, which were been delayed due to the late payment of subsidies and release of Q2 import allocation to oil traders.

“Inflation is expected to be driven by both external and internal factors in 2014. Expected near to long term increase in crude oil supply from the re-opening of Libya’s export terminals, a slowdown in crude oil demand from Asia and increasingly growing importance of shale in the economies of former traditional importers of Nigerian crude oil may result in lower oil revenue for Nigeria and decrease in its external reserves.

“This may limit Nigeria’s capacity to manage the exchange rate, resulting in pressure on the local currency and by extension, generate pressure on Inflation.”

Also, analysts at Asset and Resource Management (ARM) Limited, in their economic update for April 2014, disclosed that major disruptions along the Bonny and Forcados pipelines and its negative impact on crude export will weaken inflows into Nigeria’s foreign exchange reserves.

They said, “Oil prices are likely to remain supported at current levels by the continuing geo-political issues surrounding Russia and Ukraine and reports of fresh political unrest in Libya.

“Nonetheless, the sizable declines in oil production and the May loading schedules, suggest domestic exports are likely to remain pressured. On the flip side, following the Quarter-on-Quarter contraction in recently released NNPC fuel import allocations for the second quarter, imports are likely to trend lower, driven by oil imports.

“As in recent years, the latter decline could work to limit the impact of the lower exports on trade surplus over second quarter 2014.”