Nigeria’s real net oil export revenue dropped to $77bn in 2014, the lowest since 2011, data from the newly released OPEC Revenues Fact Sheet have revealed.
The fall in global oil prices by more than 60 per cent between June 2014 and January 2015 resulted in the decline in revenue of oil-exporting countries such as Nigeria.
Global benchmark Brent crude, against which Nigeria’s oil is priced, slumped below $50 per barrel from a peak of $115 in June last year.
The country’s earnings from oil export had in 2011 reached a peak of $99bn, up from $70bn in 2010, according to the report from the Energy Information Administration (EIA), the statistical arm of the United States’ Department of Energy.
Nigeria’s oil export revenues for 2012 and 2013 were put at $94bn and $84bn respectively, up from $57bn in 2005.
Net oil export earnings of members of the Organisation of Petroleum Exporting Countries, except those of Ecuador and Iraq, dropped last year, the EIA data showed.
For 2014, EIA estimated that, excluding Iran, OPEC members earned about $730bn in net oil export revenues (unadjusted for inflation). This represents an 11 per cent decline from the $824bn earned in 2013, largely because of the decline in average annual crude oil prices, and to a lesser extent from decrease in the amount of OPEC net oil exports.
“This was the lowest earnings for the group since 2010. These net export earnings do not include Iran’s revenues because of the difficulties associated with estimating Iran’s earnings, including the country’s inability to receive payments and possible price discounts Iran offers its existing customers,” the EIA said.
Saudi Arabia earned the largest share of these earnings, $246bn in 2014, down from $282bn in 2013, representing approximately one third of total OPEC oil revenues.
Nigeria is the fourth-highest earner in the 12-member oil cartel after Iraq ($87bn, down from $88bn in 2013) and Kuwait ($81bn, down from $91bn in 2013).
Angola, Africa’s second-biggest producer after Nigeria, saw its oil export earnings drop to $23bn last year from $27bn in 2013.
EIA projects that OPEC net oil export revenues (excluding Iran) could fall further to about $380bn in 2015 (unadjusted for inflation) as a result of the much lower annual crude oil prices expected in 2015.
EIA expects that OPEC’s crude oil production and exports (as a whole) in 2015 will be unchanged from 2014 levels, following OPEC’s decision on November 27 not to change its production targets from previous levels.
It noted that Saudi Arabia had indicated its intention to maintain its export market share rather than cut production to keep prices higher.
In the past, Saudi Arabia often played the role of the swing producer, temporarily cutting its production to offset supply growth elsewhere or weaker global demand, or increasing its output level to make up for a supply shortfall.
On a per capita basis, OPEC (excluding Iran) net oil export earnings are expected to decline by half from about $2,186 in 2014 to $1,114 in 2015.
For 2016, OPEC revenues are projected to rebound to $515bn with the expected rebound in crude oil prices.
For each country, EIA derived net oil exports based on its oil production and consumption estimates from the March, 2015 edition of its Short-Term Energy Outlook.
For countries that export several different crude varieties, EIA assumes that the proportion of total net oil exports represented by each variety is equal to the proportion of the total domestic production represented by that variety.
Nigeria earned $6bn from oil export from January to February this year, according to the EIA.
Analysts at Ecobank had recently raised concerns that the continued oversupply in the global oil market and the weak global economic picture could constrain oil demand.
“Thus, Nigeria could see a major reduction in oil revenues in 2015 compared to 2014 due to the much lower average oil price anticipated in the year. The country already faces considerable difficulties in selling its crude oil cargoes with a persistent overhang for its crude oil cargoes since December 2014,” they said.
The Ecobank analysts said the NNPC had offered further discounts to push sales but increasingly faced lower price differentials.
They noted, “This is expected to redirect government attention to other revenue sources as it seeks to fill the gap in its revenue profile. Receipts from crude oil sales have traditionally provided over 67 per cent of government revenue.
“The lower oil price environment could also sustain the downward trend in the country’s foreign reserves and exchange rate, which are dependent on the foreign currency earned by crude oil sales.”
Crude oil exports account for over 90 per cent of the country’s exports and remain the key source of foreign currency.