Nigeria’s crude oil production declined by 19.6 per cent to an average of 1.52 million barrels per day (mbpd) in the fourth quarter of 2020, compared with the 1.89 mbpd recorded in the fourth quarter of 2019.
The Central Bank of Nigeria (CBN) disclosed this in its fourth quarter 2020 economic report.
The report revealed that of the 1.52 mbpd produced in the review period, an average of 1.07 mbpd was exported, while the balance was allocated for domestic consumption.
The decline in production was as a result of the country’s commitment to the OPEC+ production cuts agreement aimed at supporting the rebalancing of the crude oil market and hence prices.
However, Nigeria’s production was expected to increase from January 2021, as OPEC+ agreed to increase total production by 0.50 mbpd by January 2021, until it gradually reaches its two mbpd target agreed at the Declaration of Cooperation (DoC).
It explained: “Domestic crude oil production and export recorded a slight decrease in the fourth quarter of 2020, as the OPEC+ sustained its agreed production cuts with improved compliance from Nigeria and other countries participating in the DoC.
“Nigeria’s crude oil production, including Agbami, recorded an estimated decline of 0.01 million barrels per day (mbpd) or 0.7 per cent, to an average of 1.52 mbpd in the fourth quarter of 2020, compared with the 1.53 mbpd produced in the third quarter of 2020.”
Also, the report showed that growth prospect in the period under review was weak as the macroeconomic instability associated with the COVID-19 pandemic and weak crude oil prices, amidst other structural factors, continued to dampen the near-term outlook for the Nigerian economy.
Furthermore, it stated that the performance of the economy continued to be weighed down largely by the headwinds associated with the resurgence in COVID-19 pandemic and weak crude oil prices. Consequently, growth was expected to remain subdued as economic activities remained tepid and lingering structural challenges continued to accentuate the impact of the COVID-19 pandemic. “Staff estimates showed that real GDP would record higher growth in the first quarter of 2021, given current economic fundamentals.
“However, by the first quarter of 2021, the economy is expected to be more resilient, following continuous monetary and fiscal policies interventions, including the judicious execution of the stimulus package of N2.3 trillion and the likely roll-out of the COVID-19 vaccine.
“These, coupled with possible rebound in crude oil prices and improved consumer demand, are expected to moderate the rate of contraction in the near-term and speed up recovery in 2021,” it stated.
According to the report, at N2.208 trillion, federally collected revenue in the fourth quarter of 2020 fell by 13.1 per cent and 8.3 per cent below the budget benchmark and the level in the preceding quarter, respectively, and was also 16.8 per cent below the collections in the corresponding period of 2019.
Oil receipts accounted for 44.6 per cent of the total collection, while non-oil constituted the balance of 55.4 per cent.
It explained that the relatively low receipts recorded in the review period underscored the lingering effect of the COVID-19 pandemic on domestic and global economic activities.
“Similarly, the retained revenue of the Federal Government of Nigeria (FGN), at N903.52 billion, fell by 38.1 per cent and 39.0 per cent below its quarterly benchmark and collections in the fourth quarter of 2019, respectively.
“Also, the provisional aggregate expenditure of the FGN declined from N2, 541.97 billion in the third quarter of 2020 to N2,387.46 billion in the review period, reflecting decreases in government spending, in the light of the current revenue challenge. “Consequently, the fiscal operations of the FGN resulted in an estimated deficit of N1, 483.93 billion. Total FGN debt outstanding at end September 2020 stood at N28, 032.58 billion, with domestic and external components accounting for 56.5 per cent and 43.5 per cent, respectively, of the total debt stock,” it added.