NNPC sees realistic oil output and price assumptions in Nigeria’s 2024 budget

The Nigerian National Petroleum Company Ltd. (NNPC) has expressed confidence that the crude oil production and price benchmark forecasts for the 2024 budget are both achievable and realistic. This was stated in response to some concerns raised about the assumptions and targets set forth in the budget.

Mele Kyari, the Group Chief Executive Officer (GCEO) of the NNPC, provided this assurance during an interactive session with the Senate Committee on Finance at the National Assembly in Abuja on Wednesday. The session was held to discuss the company’s budget for 2024 and address any concerns or questions raised by the committee.

Speaking on the dynamics of the market in relation to the projected budget benchmark price of $77.96 per barrel, Kyari said: “With what we see in the market today and potentially in the year 2024 and even beyond the next two years, it is very unlikely to see $70 per barrel oil in the market. The oscillation we are seeing, sometimes you do see prices coming down to $75 to the barrel and sometimes it goes above it, overall, benchmarks are averages. We think that the proposal by Mr. President around the $77.96 is still realisable in 2024.”

On the crude oil production projection, he stated: “The number we have is 1.785mbpd. This is cumulative of all oil produced in the country. This figure is inclusive of all production including crude oil and condensate. I need to make this clarification because of the reports in the media that our OPEC quota is 1.5million barrels per day. The OPEC quota is related only to crude oil. We also do between 250,000 to 300,000 barrels per day of condensate in our production. When you combine the two, the 1.78mbpd is realistic and realisable.”

Despite the challenges posed by security issues and force majeure, Kyari expressed confidence that the measures being implemented by the federal government would be sufficient to guarantee the projected level of production. He also emphasized the importance of maintaining dividends remittance to the federation account, in accordance with the medium-term expenditure framework. He further stated that the projected dividends from the Nigeria Liquefied Natural Gas Ltd. were achievable and would be remitted directly to the federation account as required by law. 

In response to a question regarding the road tax credit scheme, a programme in which the NNPC Ltd. contributes funds for the construction of roads in Nigeria, Kyari explained that the company would ensure that all of the roads included in the programme are completed. He clarified that the Ministry of Works is the primary entity responsible for the programme, and that the NNPC Ltd. and the Federal Inland Revenue Service play supervisory roles to ensure that the programme is properly executed and delivers value for every naira spent.

At the outset of the interactive session, Mohammed Sani Musa, the chairman of the Senate Committee on Finance, stated that the purpose of the meeting was to further discuss the budget projections for 2024 and to provide insight into the specific areas where adjustments may be necessary. Musa expressed his satisfaction with the explanations provided by Kyari, noting that the information would be helpful in the committee’s work to determine the budget’s final form.