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Oil price stability raises hope for budget

The relative stability in the prices of crude may have allayed fears over how the Federal Government will get the cash to fund this year’s N8.3trillion budget, it was learnt at the weekend.

Prices of crude have hovered between $61.17 and $62.29, a development, which suggested that the country has made extra $2.90 above the $60 benchmark of the budget.

Former Managing Director, Nigerian Liquefied and Natural Gas (NLNG) Limited, Mr Godswill Ihetu, said the development suggests that the country would not have problems meeting its budgetary benchmark of $60 per barrel, in the event that prices of oil continue to rise in the international market.

He said the situation is better, following slight recovery enjoyed by prices of oil in recent times, adding that it would have been terrible, if the prices had fallen below the $60 budget benchmark.

Ihetu, who spoke in a telephone interview, said the Organisation of Petroleum Exporting Countries (OPEC) hopes to achieve stability in the production and prices of crude oil this year, as contained in the latest edition of its market reports.

He said it is a good development for OPEC members, especially Nigeria, which relies on crude oil exports to sustain its economy.

He said the country would not find it difficult increasing oil production once internal issues are dealt with.

‘’What Nigeria wants are increased exploration and production of crude; favourable price mechanism and demand for the product. Once these happen, financing budgetary allocation would not be a problem. The country needs good price, which is looking up relative to the situations in the global oil market,’’ he said.

It would be recalled that the Minister of States for Petroleum Resources, Dr Ibe Kachikwu, said the country’s crude oil production is expected to increase from current average of 2 million barrels per day to 2.5million barrels per day by the end of 2019. He also said that the country intends to further grow crude oil production to 3 million by 2020. According to him, the county’s crude oil reserves are expected to hit 40billion barrels by 2020 raising its from current 37.2 billion barrels.

Similarly, OPEC is targeting global oil to rise to 1.29million barrels per day. Based on this, total oil demand is projected to reach 100.08 million b arrels per day for 2019.