Buhari visits Kuje after terrorist attack

Nigeria loses N1.22tn to deficit oil production – Reports

Nigeria was unable to produce about 22.658 million barrels of crude oil valued at N1.22tn in the first quarter of this year due to its persistent inability to meet the crude oil production quota approved for the country by the Organisation of Petroleum Exporting Countries.

An analysis of data contained in various OPEC reports released in different months this year, showed that Nigeria failed to meet its oil production quotas in January, February and March 2022.

Figures obtained from OPEC showed that the crude oil production quota approved by the organisation for Nigeria in January this year was 1.683 million barrels per day.

 

OPEC also approved 1.701mb/d and 1.718mb/d for Nigeria in the months of February and March 2022, according to data contained in its different reports on oil production approvals for its members.

But in the highlights of OPEC’s latest Monthly Oil Market Report for April 2022, it was observed that Nigeria’s crude oil production from secondary sources in January 2022 was 1.413mb/d.

This dropped to 1.378mb/d in February and plunged further to 1.354mb/d in March this year.

Based on the above figures, Nigeria’s crude oil production fell short of the OPEC approved quota in January by 270,000 barrels daily, which implies that the country was unable to produce 8.370 million barrels to meet its approved target for that month.

In February, the daily production loss when compared to what OPEC approved for Nigeria, was 323,000 barrels, translating to 9.044 million barrels in the review month.

Also in March, the country’s daily oil production was 364,000 barrels lesser than the OPEC approved target, meaning that Nigeria’s production in March was 11.284 million barrels lower than what was expected from it.

This implies that in the first quarter of this year, Nigeria failed to produce 28.658 million barrels of crude oil to meet its production quota as approved by OPEC.

On the revenue side, oil sector data from the global statistical firm, Statistica, indicated that in January 2022 the average price of Brent crude, the international benchmark for oil, was $86.51/barrel.

Therefore by not being able to produce 8.370 million barrels of crude in January, Nigeria lost $724.1m that month, or N301.22bn (at the official exchange rate of N416/$).

For the month of February, the average price of Brent crude was $97.13/barrel and Nigeria failed to produce 9.044 million barrels of oil to meet the quota approved for it by OPEC in the review month.

This implies that the country lost $878.44m or N365.43bn due to its inability to meet the oil production quota approved for it by OPEC in February.

The highest loss was recorded in March, as the average price of Brent was put at N117.25/barrel, while the country failed to produce 11.284 million barrels of crude in the same month.

This implies that Nigeria failed to earn the sum of $1.323bn translating to N550.388bn in March due to its failure to meet the oil production quota approved for the country by OPEC.

Cumulatively for the three-month period, the country lost about N1.22tn due to its inability to meet the crude oil production approved for Nigeria by OPEC in the first quota of 2022.

Industry operators and government officials had blamed Nigeria’s low crude oil production on the activities of vandals who rupture pipelines and steal the nation’s crude.

A document obtained from the Nigerian Upstream Petroleum Regulatory Commission in Abuja on Sunday stated that crude oil theft had severely limited the country’s earnings from oil sales.

In the document, the commission’s Chief Executive, Gbenga Komolafe, however, stated that efforts were being intensified to curb the menace.

He said, “In line with Mr President’s directive, the commission has evolved additional initiatives further to collaboration with oil and gas operating companies (including NNPC) and the top echelon of Nigerian security forces to put an end to the menace of crude oil theft in the interest of the nation.”

Komolafe said the NUPRC had commenced the validation of crude oil volumes and assessment of upstream assets integrity audit.

“The commission has commenced a full-scale audit of crude oil theft and assessment of upstream assets integrity audit to establish actual crude oil theft figures in the upstream petroleum industry,” he stated.

Komolafe added, “This is in view of recent controversial figures on theft volumes thrown up by some industry operators, which impacts negatively on federation revenue. This is very important as the nation derives its royalty from net crude oil receipts.”

The NUPRC boss also stated that the commission would be implementing an advanced cargo declaration regime.

He said, “The commission obtained necessary approvals to implement advance cargo declaration regime in upstream petroleum operations to curtail the export of stolen crude oil.

“This is by ensuring that crude oil and gas cargoes exported from Nigeria will have a unique identifier that confirms all documentation as regards the exported consignment.

“This implies that any cargo that does not have the unique identifier was not legitimately exported from the country.”

Also speaking on the issue, a former President of the Association of National Accountants of Nigeria, Dr Sam Nzekwe, stated that the government must end oil theft to save Nigeria from such humongous financial losses.

“Nigeria needs all the revenue it can get now, so nipping oil theft in the bud is paramount and must be addressed by the Federal Government as fast as possible,” he stated.

In March, The PUNCH reported that the total value of Nigeria’s crude oil stolen between January 2021 and February 2022 was about $3.27bn (representing N1.361tn at the official exchange rate of N416.25 to the dollar).

International oil companies and their counterparts in Nigeria said the massive oil theft across the country currently posed a threat to not just their existence, but to the Nigerian economy.

The Federal Government through its NUPRC had disclosed the oil theft value during a meeting with the Oil Producers Trade Section, as well as the Independent Petroleum Producers Group in Abuja.

OPTS is a body comprising IOCs operating in Nigeria, while IPPG is an association of indigenous exploration and production companies.

A presentation by the NUPRC at the event indicated that oil theft rose sharply between 2021 and 2022, as an official of the IPPG stated that about 91 per cent of total crude produced at the Bonny Terminal was stolen in January 2022.

In its report on the trend in oil theft, the NUPRC had said, “Total value loss for the period January 2021 to February 2022 is about $3.27bn.

“Average monthly value loss for the period is about $233.99m. Average daily value loss for the period is about $7.72m.”

It added, “Losses are mainly from Bonny Terminal Network, Forcados Terminal Network (and) Brass Terminal Network.”

The commission had outlined factors that aided crude oil theft to include inadequate security, poor community engagement, economic challenges, poor surveillance, stakeholder compromises and exposed facilities.

The OPTS Chairman, Rick Kennedy, who doubles as Managing Director, Chevron Nigeria Limited, and represented IOCs at the meeting, had described the massive oil theft across the country as an organised criminal activity.

Kennedy, who was represented by the Managing Director, ExxonMobil Nigeria, Richard Laing, had said, “When I say it is organised criminality, the sophistication of the engineering involved points towards a high degree of sophistication and technology, as well as the distribution.

“I think we’ve just got to be honest and accept that this is not theft but more than that.”

The IOCs called for a quick solution to the menace, stressing that the development posed a serious threat to their existence.

“It is important that the Federal Government, industry, and a whole bunch of other stakeholders find a solution and find it quickly. That will be my strong advice,” Laing had stated.