NIGERIA’s rig count, a global index for measuring activities in the upstream sector, has increased by 20.8 per cent Year-on-Year, YoY, to 29 in the third quarter 2021(Q3’21) from 24 recorded in the corresponding period of 2020, according to the reports of the Organisation of Petroleum Exporting Countries, OPEC.
During the quarter under review sector activities appear on the low ebb in July with just seven rigs in operation, but it quickly rose to 11 in August and maintaining same level in September.
The organization did not provide reasons for the increase, but Vanguard’s investigation showed that it might have been connected to improved activities after the complete lockdown of the oil and gas industry under the COVID-19 adverse operating environment.
This was even as the OPEC’s latest Monthly Oil Market Report, MOMR, for the month of October, 2021 puts the Nigeria’s oil output at 1.239 million barrels per day, mb/d, excluding condensate, based on data obtained from direct sources.
However, when data obtained from indirect sources were considered, the organization, which has already increased Nigeria’s quota to 1.8 mb/d from 2022, puts the nation’s output at 1.271 mb/d.
Already, the government proposed its 2022 budget benchmarks on $57 per barrel and 1.8 mb/d, but prices currently hover at over $80 per barrel, indicating that its revenue target would likely be met despite the shortfall in output.
In the budget presentation to the National Assembly, President Muhammadu Buhari had said: “The 2022 to 2024 Medium Term Expenditure Framework and Fiscal Strategy Paper sets out the parameters for the 2022 Budget. A Conservative oil price benchmark of 57 US Dollars per barrel; daily oil production estimate of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); exchange rate of four 410.15 per US Dollar; and projected GDP growth rate of 4.2 percent and 13 percent inflation rate.
“Based on these fiscal assumptions and parameters, total federally-collectible revenue is estimated at N17.70 trillion in 2022.
“Total federally distributable revenue is estimated at N12.72 trillion in 2022 while total revenue available to fund the 2022 Federal Budget is estimated at N10.13 trillion. This includes Grants and Aid of N63.38 billion , as well as the revenues of 63 Government-Owned Enterprises.
“Oil revenue is projected at N3.16 trillion, Non-oil taxes are estimated at N2.13 trillion and FGN Independent revenues are projected to be N1.82 trillion .”
In any case, Senior Research Analyst at FXTM, Senior Research Analyst at FXTM, Lukman Otunuga, who raised hope on continued stability in oil prices, said: “One of the major themes dominating global markets is the recent surge in oil prices.
“Brent and WTI crude have appreciated to multiyear highs this month thanks to the combination of tightening supplies and rising demand. The explosive appreciation in oil is bad news for energy consumers but a welcome development for energy-producing countries like Nigeria which acquires over 90% of export earnings and roughly 70% of government earnings from oil sales.”