Nigeria's oil output down to 1.6 million barrels: Yar'Adua
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ABUJA (AFP) — Nigeria's oil output has dropped to 1.6 million barrels per day compared to last year's average of around two million bpd, President Umaru Yar'Adua said on Tuesday.
"The reality today as a result of the... OPEC quota and activities of militants in the Niger Delta... the average production has fallen to 1.6 million barrels per day," Yar'Adua said as he signed into law the 2009 national budget.
Oil-dependent Nigeria, which is targeting four million bpd next year, had projected its 2009 budget on 2.209 million bpd.
OPEC, a cartel of oil producing nations, which pumps 40 percent of the world's oil, cut output late last year in a bid to reverse tumbling prices and protect its members' revenues.
Nigeria's actual production last year averaged just over two million barrels a day, because of the unrest in the southern oil-producing Niger Delta, Yar'Adua said in December.
The budget for Nigeria, the world's eighth-largest oil producer, was based on a crude oil sale price of 45 dollars per barrel down from 59 dollars the previous year.
Yar'Adua warned that should production levels continue to tumble and if the price does not rise considerably, the country could face an unacceptable budget deficit.
"Should this low production turn out to be our average for the year, and the average price fall to 40 dollars per barrel from the original budget projection of 45 dollars per barrel, our fiscal deficit will increase to... 5.24 percent of GDP, which is way above the three percent allowable limit under the fiscal responsibility act," he said.
The 3.1-trillion-naira (21-billion-dollar) budget Yar'Adua signed has a deficit of 3.02 percent of GDP.
The benchmark exchange rate, for the budget proposed in December, was set at 125 naira to the dollar, yet the local currency now trades at 147 to the greenback.
Before 2006, Nigeria's production peaked at around 2.6 million bpd, but the last three years have seen an increase in attacks and kidnappings targeting oil companies in the volatile Niger Delta region.
The attacks are staged by armed groups claiming to be fighting for a greater share of oil wealth to go to the locals or by criminal gangs.
The most prominent of the militant groups is the Movement for the Emancipation of the Niger Delta (MEND).
The resulting reduction in output has put pressure on the crucial export earnings for Africa's most populous nation of 140 million people.
Nigeria's foreign reserves have taken a huge knock to just under 50 billion dollars (40 billion euros) in February from 57.2 billion dollars in December, according to bank officials.
The country relies heavily on oil and gas, which according to the World Bank rakes in more than 90 percent of export earnings and 85 percent of government revenues.