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Nigeria lost N249bn in oil output in July

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By Abraham Adekunle

PETROAN president says danger looms as the record calls for investigation.

Since Nigeria recorded the record-breaking lowest oil output in the last decade, there has been a spotlight on the oil and gas industry. This is because the country relies on the sale of crude oil for the majority of its earnings. So, a drop in output means less revenue for the government. According to the latest production data, Nigeria has lost about N249 billion crude oil revenue in July 2023. This is following a plunge in the country’s oil output by over four million barrels in the same month.

Data obtained from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicated that while the country’s total oil production in June was 37.5 million barrels, it dropped to 33.5 million barrels in July. The country lost about four million barrels of oil between June and July as a result. For decades, the government as well as multinational companies have blamed the situation on the same range of factors, which includes pipeline vandalism, bunkering and illegal refinery.

Non-state actors have negatively impacted the oil-rich Niger Delta.

Former President Umaru Musa Yar’adua had, during his tenure, granted amnesty for militants in the Niger Delta region, where most of Nigeria’s crude is being mined. Different militant groups had sprung up and declared war on the Federal Government. Their displeasure with the government and oil firms was that the whole country benefited from resources in their region while indigenes of the place were left stranded and sometimes indigent. Additionally, the operations in the region were damaging the environment. Oil spillages left residents unable to farm or fish.

One of the militant groups, Movement for the Emancipation of the Niger Delta (MEND), had gained notoriety for attacking oil workers and burning oil rigs and pipelines. Although the group has mostly lost its authority in the region as they are being mentioned less often, their legacy is still being felt. Now, independent individuals and groups have constituted a network of oil thieves, siphoning oil sometimes with the knowledge of a high-ranked officer. Recently, the Buhari-contracted Tompolo team had uncovered an offshore oil depot which was siphoning oil from a pipeline. The depot had reportedly been operating for years.

A record of the country output and its timeline.

According to World Bank data, the average cost of Brent, the global benchmark for crude oil, in July 2023 was $80.1 per barrel. This means that Nigeria lost about $320.4 million by losing four million barrels of crude in July. As of July, the average dollar-to-naira exchange rate was N777.30 per dollar. When the average exchange rate in July is multiplied with the $320.4 million, it implies that Nigeria lost about N249 billion during the month under review.

On daily crude oil output, figures from the NUPRC showed that the country pumped 1.25 million barrels per day in June, but this dropped to 1.08 million barrels per day (mbpd) in July. It is recalled that Nigeria production went below 1 mbpd in 2022 and has been declining arbitrarily since then. The country had produced 1.18 mbpd in May, which was higher than the 0.99 mbpd produced in the month of April. Output dropped by 38,102 barrels per day in March, translating to a cumulative loss of about 1,181,162 barrels, and signaled the first plunge in oil production in the last seven months. But the drop grew worse in April, as it plunged by 269,600 per day when compared to what was recorded in the preceding month.

Drop in oil output signals danger, says Gillis-Harry.

Meanwhile, the President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, had earlier told news correspondents while commenting on the development that the drop in oil output posed a dangerous sign. He stated that it was a very dangerous signal of a looming trouble. “We thought that with what the Tompolo team is doing, we should be approaching about two million barrels of crude oil production per day,” he said. He added that it calls for an urgent investigation.

Related Link

NUPRC: Website

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