Nigeria's budget deficit for 2023 is projected to widen due to the country's underproduction of crude oil in the first four months of the year. Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reveals that Nigeria has produced only 70% of its benchmark oil production of 1.69 million barrels per day (bpd) during that period. This shortfall amounts to a deficit of 57.94 million barrels.

The National Assembly had increased Nigeria's crude oil benchmark to $75 per barrel, aiming to fund the 2023 budget if the production target was met. However, the data suggests that this goal is unlikely to be achieved. Nigeria's monthly production figures for the first four months of the year were 39 million barrels in January, 36.5 million barrels in February, 39.3 million barrels in March, and a significantly low 29.95 million barrels in April.

Factors contributing to the decreased oil production include the shutting down of oil platforms and the declaration of force majeure by Exxon Mobil at the Qua Iboe asset, which followed an industrial action by the company's workers' union. These disruptions led to Nigeria's crude oil production falling to a seven-month low of 998,602 barrels per day in April.

The 2023 Appropriation Bill, signed into law by President Muhammadu Buhari, included a budget of N21.83 trillion, with a deficit of N12.1 trillion. This deficit is approximately 4.3% of Nigeria's Gross Domestic Product (GDP), raising concerns about increased borrowing and its potential negative impact on the economy.

Furthermore, recent industry data reveals a significant decline in production at key oil terminals. Qua Iboe production dropped from 4.2 million barrels in March to 1.9 million barrels in April, while Bonny terminal saw a decrease from 3.2 million barrels to 2.2 million barrels. Forcados production fell from 5.7 million barrels to 4.8 million barrels, and Escravos reduced from 4.3 million barrels to 3.8 million barrels.

Additionally, data from the Organisation of Petroleum Exporting Countries (OPEC) indicated that Angola surpassed Nigeria as the top African crude oil producer in April. Angola recorded a production of 1.06 million barrels per day, while Nigeria's output was 999,000 barrels per day.

In summary, Nigeria's underproduction of crude oil in the first four months of 2023 has resulted in a widening budget deficit and poses challenges for funding the country's budget. Factors such as industrial actions, oil theft, pipeline vandalism, and waning investment in the oil sector have contributed to the decline in oil production.

source;thisdaylive
https://www.thisdaylive.com/index.php/2023/05/16/nigerias-n12-1trn-2023-budget-deficit-may-widen-as-oil-production-shrinks-by-58m-barrels-in-four-months/