It’s no longer news that the oil-rich Saudi Arabia had on December 8, 2022, reported its first budget surplus in almost 10 years due to increased revenue boosted by higher oil prices.
According to reports, the 2022 surplus amounted to 102 billion riyals ($27 billion), which constitutes 2.6% of Saudi Arabia’s Gross Domestic Product (GDP), according to the kingdom’s finance ministry.
Why Nigeria is not like Saudi Arabia: Following the news, some Nigerians took to social media to ask why Nigeria was not as productive as Saudi Arabia, as both countries are oil-producing economies.
However, it is instructive to note that Nigeria has 38 billion barrels of crude oil, while Statista data shows that Saudi Arabia has 193 billion barrels as of 2021.
In a brief conversation, Oil market analyst, Kayode Oluwadare, told Nairametrics that Saudi Arabia is the second largest oil producer in the world. However, the kingdom has been able to take advantage of the high oil prices resulting from the Russia-Ukraine war-linked market disruptions.
- He said, “For perspective, a single field in Saudi Arabia (though its largest), the Ghawar field produces 3.8 million BPD compared to Nigeria’s total production that even dropped below 1 million barrels per day (BPD) at some point in 2022.”
- “Also, Saudi’s large proven reserves enables the country to bring new oil production to the market compared to Nigeria that is struggling to increase its proven reserves due to falling investment in prospecting and exploration activities amidst other factors. It’s simply a game of numbers. The more oil you produce, the larger your revenue.”
Lack of transparency: Oluwadare also told Nairametrics that transparency is one factor that has always worked out for Saudi Arabia, stating that Nigeria can learn from that quality.
- He said, “The kingdom’s oil company, Saudi Aramco is one of the most transparent and efficient national oil companies in the world. Little wonder it was a sellout when a very small fraction of its shares was publicly traded in the world’s largest initial public offering (IPO) a few years ago.
- ”As a result, the oil giant is able to fully declare the true value of its revenues, unlike the NNPC that lacks operational efficiency and financial discipline. Also, the scepter of petroleum subsidy still looms large over Nigeria’s ability to balance its budget before even thinking of budget surplus.”
For the record: Budget surplus occurs when a government’s revenue exceeds its expenditure – both capital and recurrent. In this case, Saudi Arabia has earned more oil and gas revenue than projected in the last one year.
The Federal Government in sharp contrast to the budget performance in Saudi Arabia said that it recorded a budget deficit of N5.33 trillion between January and August 2022.