THE oil sector contribution to the Nigerian economy declined to 5.19 percent at N1.055 trillion in the fourth quarter of 2021, down by 3.68 basis points, from the 5.87 percent contribution in the corresponding period in 2020.
Latest data from the National Bureau of Statistics, NBS, showed that the nation in the fourth quarter of 2021 recorded an average daily oil production of 1.50 million barrels per day (mbpd), lower than the daily average production of 1.56mbpd recorded in the same quarter of 2020 by 0.06mbpd and lower than the third quarter 2021 production volume of 1.57mbpd by 0.07mbpd.
Also, real growth of the oil sector was –8.06 percent (year-on-year) in fourth quarter 2021 indicating an increase by 11.71 percent points relative to rate recorded in the corresponding quarter of 2020.
The NBS report also showed that growth increased by 2.68 percent points when compared to third quarter 2021 which was –10.73 percent. Quarter-on-Quarter, the oil sector recorded a growth rate of -24.06 percent in Q4 2021. Annual growth stood at -8.30 percent, a rate better than the -8.89 percent recorded in 2020.
The report added: “The Oil sector contributed 5.19 percent to total real GDP in Q4 2021, down from figures recorded in the corresponding period of 2020 and down compared to the preceding quarter, where it contributed 5.87 percent and 7.49 percent respectively. Nevertheless, the sector contributed 7.24 percent to real GDP in 2021”.
However, there was an indication that the contribution of the oil industry to the nation’s GDP will continue to rise in the coming months as oil price hovers at over $90 per barrel. The price of the nation’s Bonny Light had surged to over $96 per barrel in the past few days before dropping to the current $93.66 per barrel.
In the budget presentation to the National Assembly, President Muhammadu Buhari had said: “The 2022 to 2024 Medium Term Expenditure Framework and Fiscal Strategy Paper sets out the parameters for the 2022 Budget.
“A Conservative oil price benchmark of 57 US Dollars per barrel; daily oil production estimate of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); exchange rate of four 410.15 per US Dollar; and projected GDP growth rate of 4.2 percent and 13 percent inflation rate.
“Based on these fiscal assumptions and parameters, total federally-collectible revenue is estimated at N17.70 trillion in 2022.
“Total federally distributable revenue is estimated at N12.72 trillion in 2022 while total revenue available to fund the 2022 Federal Budget is estimated at N10.13 trillion. This includes Grants and Aid of N63.38 billion, as well as the revenues of 63 Government-Owned Enterprises.
“Oil revenue is projected at N3.16 trillion, Non-oil taxes are estimated at N2.13 trillion and FGN Independent revenues are projected to be N1.82 trillion.”
Similarly, Senior Research Analyst at FXTM, Lukman Otunuga, who raised hope on continued stability in oil prices, said: “One of the major themes dominating global markets is the recent surge in oil prices.
“Brent and WTI crude have appreciated to multiyear highs this month thanks to the combination of tightening supplies and rising demand.
“The explosive appreciation in oil is bad news for energy consumers but a welcome development for energy-producing countries like Nigeria which acquires over 90 per cent of export earnings and roughly 70 percent of government earnings from oil sales.”
