The Federal Government has set a $57 benchmark for oil price in its 2010 budget with an average of 2.088 million barrels per day, but industry operators said this price of crude on which the budget is based is “very optimistic.”
Not a few of them also hold the same view with government’s setting aside of $5 billion as the joint venture cash call.
Industry analysts said the $57 benchmark and 2.088 million barrels of crude oil day is just too optimistic in view of the fact that the one is not sure how the amnesty would be sustained so as to warrant the continued production level without disruptions from the militants who are not exactly fully settled.
They insist that the problem of proper rehabilitation of the militants through a more transparent way still constituted a major danger to smooth operations of oil companies in the Niger Delta.
The country currently produces 2.2million barrels of oil per day with 1.7 million as crude oil and the remaining, being condensate. Though the country currently has capacity to produce three million barrels of crude oil but it is being constrained by the activities of militants which greatly reduced the production capacity of the country.
There were 38 billion barrels of proven oil reserves in Nigeria as of last month, according to the Department of Petroleum Resources DPR. Meanwhile, as at current rates, this would be 43 years of supply if no new oil was found.
The government is also setting aside $5 billion as the joint venture cash call.
Pipeline vandalism, kidnappings, and militant takeover of oil facilities have meanwhile also greatly reduced production, which could be increased to 3 million barrels per day in the absence of such problems. The Nigerian government hopes to increase oil production capacity to 4 Mbbl/d by 2010. Nigeria is the world’s eighth largest exporter of crude oil and sends 42 percent of its exports to the United States. The country is heavily dependent on the oil sector, which accounts for 95 percent of its export revenues.
Special Report 
