For its 2022 budget the federal government will set a crude oil benchmark price of $57 per barrel at 1.88 million barrels per day.
This was revealed by Finance Minister Zainab Ahmed on the 21st July 2021 according to a Reuters report, she also stated that the new crude benchmark would increase Nigeria’s current oil production from 1.47 million barrels per day to 1.88 million barrels per day as the global economy reopens for business, causing crude oil prices to reach their highest level since 2018.
As a result of an agreement with OPEC and other oil-producing nations to reduce output, Africa’s largest oil exporter (Nigeria) is producing approximately 1.47 million bpd of oil. Nigeria has a capacity of about 2 million bpd and according to Ahmed, the federal government’s total spending for next year will be 13.98 trillion naira ($34 billion), a 3% increase over this year’s budget. (1 dollar = 411.0000 naira).
Nigeria relies on oil exports for more than half its budget and 95% of foreign exchange and presently brent crude oil is currently trading at $73.60 per barrel.
The positive effects on the economy and AGO/PMS/DPK prices would be that there will be an improvement over last year’s price benchmark of $40 per barrel. This accomplishment will free up more funds for both capital and recurring expenditures.
With the increase in prices at the International pricing system, the prices of AGO/PMS/DPK remains unbalanced, with the FG hesitant to reflect the International pricing system. Due to the severe economic hardship international prices are being imposed on the general public, most likely this will result in an increase in subsidy expenses for major oil marketers, with the only option being to raise pump prices.
This emphasizes the fact that Nigeria requires refineries within the country so that we can refine our own products and sell them at pick-up prices.
