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Nigeria Plans to Revise Budget on Oil Price Below $50 a Barrel

Nigeria plans to further revise downwards its budgeted benchmark oil price this year to below $50 per barrel, ahead of elections next month, according to Godknows Igali, permanent secretary at the nation’s Ministry of Power.

The economy of Africa’s top oil producer can sustain crude prices at $50 a barrel for about five years, and the government will complete the budget in a “couple more weeks,” Igali told reporters Tuesday at a conference in Abu Dhabi.

Nigerian Finance Minister Ngozi Okonjo-Iweala last month proposed cutting this year’s budget by 8 percent and reduced its benchmark oil price to $65 a barrel from last year’s $77.50 a barrel in the face of tumbling crude prices. Lawmakers in Africa’s biggest economy are considering the proposals before presidential elections on Feb. 14.

Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, is probably assuming $80 oil in its 2015 budget, according to John Sfakianakis, a former Saudi government economic adviser. Iraq, OPEC’s second-biggest producer, is using $60, Iran’s draft budget is assuming $40 and Kuwait has proposed basing its 2015-16 budget on $45 oil.

Prices of Brent crude, a benchmark for more than half the world’s oil, have dropped 55 percent in the past year, forcing governments to reduce subsidies on diesel, natural gas and utilities and companies to cut billions from capital budgets. Qatar Petroleum and Royal Dutch Shell Plc called off plans to build a $6.5 billion petrochemical plant this month because it was “commercially unfeasible” in the current energy market.

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