Nigeria '09 budget sees oil output below 2.5 mln bpd

ABUJA (Reuters) - Nigeria's proposal for the 2009 budget is based on projected oil production of below 2.5 million barrels per day at a benchmark price of between $60-62 per barrel, a government source said on Monday.

The proposal, drawn up by Nigeria's budget office, reflects expectations that the OPEC member's oil output will not rise significantly next year despite the introduction of two new offshore oilfields.

"It is going to be below 2.5 (million bpd)," the source, who declined to be named, said of the projected production figure. The 2008 budget was based on projected production of 2.45 million bpd at a benchmark price of $59 per barrel.

Nigeria, the world's eighth biggest oil exporter, uses these key assumptions to calculate how much revenue it will get in a given year.

Any oil revenue received above the benchmark price is supposed to go into an excess crude account, which was created to guard against price volatility on world markets and enable Nigeria to save money.

The budget office is still finalizing the draft proposal and is expected to send it to President Umaru Yar'Adua and his cabinet for approval in the next two weeks, the source said.

The budget will then be sent to parliament, where it could be altered significantly. The benchmark oil price for the 2008 budget was initially proposed at around $54 a barrel.

TOO OPTIMISTIC

Previous government oil output forecasts have been overly optimistic.

Experts agree that Nigeria is unlikely to meet its 2.45 million bpd target in the 2008 budget as more than a fifth of production remains shut down.

Persistent militant attacks and unreliable government financing have kept oil production at around 2 million barrels per day for the past two years.

Militant groups in the restive Niger Delta last week fought a seven-day "oil war" against the oil sector, bombing pipelines, flow stations, gas plants and platforms.

But the 2009 output target could be more realistic with the addition of Chevron's (CVX.N) Agbami oilfield, which began production in late July and is expected to produce around 250,000 bpd by the end of next year.

Total's (TOTF.PA) Akpo field is also expected to come online, pumping around 200,000 bpd next year.

If Nigeria is unable to reach the output target, the government may be forced to tap into the excess crude account to plug revenue shortfalls and fund the budget.

(Editing by Leslie Adler)