Nigeria’s Bonga crude exports suffer delays
… As budget deficit falls, Nigeria saves less oil money
Oil traders said last Thursday that Nigerian oil shipments from the Shell-operated 200,000 barrel per day (BPD) Bonga field are facing delays of up to five days, adding to supply disruptions in the top African producer, according to agency reports.
The reason for the delays at the offshore facility was unclear, with one trader saying it was taking longer to fill tankers because of lower-than-expected production.
Shell said that there were no production issues at the field, but did not comment on the loading delays.
One trader said that the Bonga stream, one of Nigeria’s largest, was originally due to load six cargoes in April but one of these has now been deferred to May and others have been issued with revised loading dates.
A second trader with direct knowledge of Bonga exports said that the stream was subject to delays of several days in April.
Exports from Nigeria, a member of the Organisation of Petroleum Exporting Countries (OPEC) have been frequently disrupted in recent months due to pipeline leaks and floods.
The country typically exports around two million-2.2 million BPD.
Meanwhile, Nigeria’s budget deficit is set to fall to 1.85 per cent of gross domestic product (GDP) in 2013, the Budget Office Director-General Bright Okogwu said last Thursday, as government opted to save less of its oil revenue.
A Federal Ministry of Finance document circulated after his remarks put last year’s budget deficit at 2.85 per cent of GDP.
President Goodluck Jonathan approved a N4.99 trillion budget last month for 2013, after it was passed by the National Assembly, ending two months of disputes over the spending plans.
It was an increase on last year’s N4.7 trillion budget.
“There’s has been a trending downwards of the fiscal deficit,” Okogwu told journalists in Abuja.
“We have a deficit of about 1.85 percent of GDP. I think this is very good going.”
Africa’s second biggest economy and top oil producer is growing as an investment destination, as fiscal stability improves, her currency stablises and economic growth remains high.
But investors are wary of a long-established tendency to mismanage oil revenues, mostly because of endemic corruption.
Nigeria’s revenues from oil production usually exceed spending and the surplus is deposited into the Excess Crude Account (ECA), which means the deficit is artificial – it can usually be financed from the country’s own savings.
The balance in the ECA has been increasing over the past year which suggests Nigeria is saving more of her oil windfall, a key objective of the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala.
The document released by the Federal Ministry of Finance showed total revenue collected by the Federal Government is projected to increase to N4.1 trillion, from N3.56 trillion in 2012.
But that projected increas was partly a function of a higher benchmark oil price assumption — $79-per-barrel, compared with $72 in the 2012 budget.
It was also owing to a projected increase in oil production to 2.53 million BPD, compared with 2.48 million BPD in 2012.
Oil industry experts think the figure may be too optimistic — National Bureau of Statistics (NBS) figures show oil production averaged around 2.34 million BPD last year.
Analysts said that the shrinking of the deficit from an earlier estimate of 2.17 per cent may paradoxically be because the National Assembly inflated spending by raising the benchmark oil price assumption from the original $75-per-barrel, boosting revenue projections.
Money earned from oil over and above the benchmark price is automatically deposited into the ECA, so a higher price means more money freed up to cover spending, which reduces the nominal deficit, but, in reality, lowers oil savings.
When Jonathan presented the budget late last year, the National Assembly passed it, but increased spending.
Members wanted more spending for projects and their constituencies.
In the end, the administration backed down: spending rose to N4.99 trillion from the N4.92 trillion proposed by Jonathan’s team, funded by an increase in the benchmark price.
“It all depends on what the reason are behind the fall in the deficit,” Head of Africa Research at Standard Chartered Bank, Razia Khan, said.
“If it’s due to that increase in the benchmark price, which increased spending levels, then it’s not necessarily good news because it means Nigeria is actually saving less oil money.”
She said that oil output assumptions in Nigeria were “becoming increasingly optimistic over time.”
But she added that lower borrowing costs because of falling sovereign bond yields may also have contributed.
The document also showed the portion taken up by recurrent expenditure fell slightly to N2.39 trillion, from N2.47 trillion.
Okonjo-Iweala has made it a central aim to slash Nigeria’s high recurrent expenditure and increase badly needed investment in infrastructure.
The budget assumes GDP growth of 6.5 per cent in 2013 and inflation of 9.5 per cent.
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