Despite enjoying a windfall from sale of crude oil occasioned by a rise in global prices, Nigeria's actual output has gone down in terms of volume.

This year's budget is predicated on $59 per barrel while on the average, the market price peaked at $147 late last month and has on the average hovered around $135 per barrel for many months now.

The 37 American Petroleum Institute (API) classification rates Nigerian crude the most sought after in the world due to its low sulphur content and light in nature. These features give the crude a premium of about three US dollars over and above the prevailing market determined price.

Hence, at 1.89 million barrels per day (m/bpd) output, government takes 57 per cent of this while the balance goes to the oil companies as return on their investments.

But from a possible production capacity of 3.2 million barrel per day (bpd) of crude oil in the Niger Delta, Nigeria now produces only between 1.89 million and 2 million bpd, Finance Minister of State, Mr. Remi Babalola confirmed to The Guardian at the weekend.

The development, which is as a result of the restiveness in the region, has negatively affected the revenue target of the country, as crude oil remains the mainstay of the Nigerian economy.

In a recent report on its estimates on how much crude would be needed from its 13 members in order to balance the market in 2008, the Organisation of Petroleum Exporting Countries (OPEC) had noted the downward movement of Nigerian oil production.

The report shows that for the second month running, Angola topped Nigeria as Africa's biggest oil producer in May. This underscores Angola's success in the past two years in boosting its oil pumping capacity and Nigeria's ongoing production woes amid regular militant attacks on oil infrastructure.

According to industry figures, between 2005 and 2006, shut-in production as a result of violence in the Niger Delta was in the region of 500,000 to 700,000bpd. This was essentially due to crude pipeline vandalisation and hostage-taking by militant groups in the region.

However, since early last year till now, the shut-in production has peaked at 1.4m/bpd. The volume was about 1.3 m/bpd early this year, according to the Minister of State for Energy (Petroleum), Mr. Odein Ajumogobia.

He said that Nigeria's production was around 1.8m/bpd before the June 2008 Bonga shut-ins, indicating that supply outages could be higher than industry estimates.

On monetary implication, though Nigeria's output has gone down in terms of volume, the revenue profile has been on the increase. For example, this year's budget is predicated on $59 per barrel while on the average, the market price peaked at $147 late last month and has on the average hovered around $135 per barrel for many months now.

However, the prevailing crisis in the Niger Delta has also impacted on the industry operators, with the Shell Petroleum Development Company of Nigeria Limited is worst hit. With the largest onshore facilities in the country, the company, before now, produced half of the national crude oil output. But the crisis has eroded this position.

Exxon Mobil and Chevron Nigeria Limited have recorded less casualties in terms of production shut-ins and disruptions to operations as a result of the crisis in the region. ExxonMobil is the second largest oil producing company in Nigeria with output around 900,000 barrels per day.

A senior executive with Exxon Mobil confirmed that the situation with Mobil was not as serious as Shell's, as its (Mobil) part of the Niger Delta is relatively peaceful. But the official noted that the company had it rough when its in-house workers' union declared an industrial action leading to shut-in of about 600,000 barrels of crude.

Although Chevron production was not as affected as that of Shell and Nigerian Agip Oil Company (NAOC), the company's crisis was compounded by its workers' strike. They had called for improved conditions of service and security for the workforce.

Chevron's output hovers around 700,000 barrels per day but this figure will surely go up with the coming on stream of the Agbami offshore field that would add about 225,000 barrels per day to its portfolio.

The Federal Government's 2008 budget estimates were based majorly on oil production target of 2.45bpd and oil price of $53.83 per barrel, which was later jerked up by the National Assembly to $59 per barrel.

The impact of the production shortfall on the revenue fortune and by extension other aspects of development plans in the country are only imaginable, according to the minister.

Babalola described the scenario as ominous particularly because of its implication for the future of the country, as it is capable of discouraging investments in the oil industry, which, today remains Nigeria's backbone.

He said: "The Niger Delta crisis is getting problematic and the earlier we solved it the better for the country because it has huge implication on the fortunes of Nigeria.

He stated that the country had not been able to meet the 2008 budget projection of 2.45bpd because of the restiveness in the region.

"We have been getting as low as between 1.8 million and 2 million barrels per day when in essence we have the potential of producing up to 3 million barrel per day," he said.

"This development has far-reaching negative implication on our revenue profile, which may slow down development targets. But far more than that is the implication for tomorrow, because the restive situation is driving away investors in the region's oil industry.

"This is dangerous and the more reason concerned Nigerians must intervene to check the volatile situation before it gets complicated," he warned.

Worried by the development in the Niger Delta, President Umaru Musa a fortnight ago reportedly approached the British Government to assist Nigeria in the policing of the region particularly the maritime routes.

This is to crack down on the militants and those he referred to as oil thieves who specialise in the bunkering of Nigeria's crude for sale at international markets.

But some Nigerians within and outside the shores of the country have rejected the Yar'Adua strategy to further militarise the region, warning that the tactics would instead exacerbate the already bad situation.

They insist that the best way out of the circumstances was to engage the Niger Delta people in true dialogue, which the government had accepted.

Commenting on the issue, the Chairman, University Assistance Programme, Nigerian Association of Petroleum Explorationists (NAPE), Mr. Afe Mayowa, said the enormity of the crisis couldn't be felt now until five, 10 years later.

Mayowa, a chieftain of one of the multinational oil service companies in Nigeria, said many companies especially the service providers, had re-located their operational bases away from the Niger Delta with focus on emerging neighbouring oil-producing countries of Angola, Gabon, the Gulf of Guinea and even Ghana.

"The cost of doing business today compared with what it used to be 10 or 15 years ago has gone up more than 100 per cent," he said. In his view, in bidding for any project now, adequate provision must be made for security and that the rate of insurance for both equipment and foreign expatriates has also gone up.

"The Niger Delta is considered a high risk region and internationally, those who want to work there must factor in all these variables. That is why the cost of doing business is very high in Nigeria compared to other countries in Africa," Mayowa said.