Nigeria’s earnings from crude oil plunged by about N75.9bn in February and March this year despite the increase in global oil prices for the third consecutive month in March 2022.
The latest data from the April 2022 Monthly Oil Market Report of the Organisation of Petroleum Exporting Countries showed that while oil prices had been on the increase since January this year, Nigeria’s production had been on the decrease.
In its oil market highlights on crude oil price movements, the organisation said, “Crude oil spot prices rose for the third-consecutive month in March. The North Sea Dated benchmark gained more than $20/barrel on a monthly average and WTI gained almost $17/barrel, on the back of escalating geopolitical tensions in Eastern Europe and concerns this might result in large oil supply shortages, amid trade dislocations.
“The OPEC Reference Basket price increased $19.53, or 20.8 per cent, to settle at $113.48/barrel. Oil futures prices witnessed elevated volatility due to the uncertain short-term oil supply and demand outlook. The ICE Brent front-month rose $18.36, or 19.5 per cent, to average $112.46/barrel and NYMEX WTI gained $16.63, or 18.1 per cent, to average $108.26/barrel.”
However, despite the rise in global crude oil prices, Nigeria’s earnings from the sale of the commodity had been dropping due to the monthly plunge in its oil production.
The report showed that the country’s oil production had been falling since January this year, for instance, while the country produced 1.413 million barrels of crude oil daily in January, this dropped to 1.378 million barrels per day in February.
This indicates a daily plunge of 35,000 barrels and translates to a total loss of 980,000 barrels of crude oil in February 2022.
The country’s crude oil production crashed further by 744,000 barrels in March 2022 when compared to what the country produced in the preceding month of February.
An analysis of the OPEC document showed that Nigeria’s oil production dropped from the 1.378 million barrels per day recorded in February 2022 to 1.354 million barrels per day in March, indicating a daily plunge of 24,000 barrels of crude oil.
This implies that for the 31 days in March, the country’s oil production dropped by a total of 744,000 barrels, despite the rise in global oil prices.
The average prices of Brent crude, the global benchmark for oil, in February and March 2022 were $97.13/barrel and $117.25/barrel, according to data from the global statistical firm, Statistica.
The official exchange rate of the Central Bank of Nigeria during the two-month period under review was put at N416 to the dollar.
Therefore by losing 980,000 barrels of crude in February, Nigeria’s oil earnings dropped by N39.6bn in that month.
It also plunged further by N36.3bn in March due to the loss of 744,000 barrels of crude in the month of March.
This implies that the country’s oil earnings during the two-month period dropped by N75.9bn amidst the rise in global crude oil prices and the financial challenges confronting Nigeria as a nation.
The situation confirmed concerns by both officials and International Oil Companies operating in Nigeria that crude oil production in the country had been on the decline since 2021.
This, they said, was due to the massive oil theft that had bedeviled the sector since January 2021 till date, though they noted that efforts were ongoing to address the issue.
On March 24, 2022, for instance, 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), according figures from the Nigeria Upstream Petroleum Regulatory Commission.
International oil companies and their counterparts in Nigeria also stated recently that the massive oil theft across the country posed a threat to not just their existence, but to the Nigerian economy.
But the NNPC’s Group Managing Direction, Mele Kyari, had announced recently that measurable outcomes against the massive crude oil theft in the Niger Delta would be visible in three weeks’ time.
Kyari had said, “As we speak now there is a massive disruption to our operations as a result of the activities of vandals and criminals along our pipelines in the Niger Delta area.
“This has brought down our production to levels as low as we have never seen before. Today we are doing less than 1.5 million barrels per day simply because some criminals have decided that they should have some infractions on our pipelines.”
Nigeria’s oil production quota by OPEC has revolved around 1.8 million barrels per day. The country has repeatedly missed this target due to oil theft.
“And that clearly is the biggest form of business disruption that we are facing today,” the NNPC boss had stated.
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