At 182.4m Barrels Deficit, Nigeria Barely Able to Drill Half of Projected 2022 Oil Output

Emmanuel Addeh in Abuja

Pegged against the country’s oil benchmark of 1.88 million barrels per day in the 2022 budget, the country’s crude production only hit 51.3 per cent of the forecast between January and August, THISDAY analysis of latest data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed.

Specifically, Nigeria was only able to produce a cumulative 283.77 million barrels during the period as against the 466.2 million barrels forecast in the 2022 budget for the period.

In addition, with a 58.2 million barrels per month estimate approved benchmark by the national assembly in December 2021, the difference between actual and projected output was a whopping 182.47 million barrels in unproduced oil.

Nigeria’s oil sector challenges have recently worsened, with production hitting a record low of 972,394 barrels per day in August, according to the NUPRC data reported by THISDAY last week.

The development marked a new low in the over a year-long downward spiral in Nigeria’s capacity to drill enough oil to boost its desperately needed foreign exchange even at a time that the commodity has continued to sell around a rarely seen price of $100.

The decrease below the 1 million bpd mark in production in August despite months of assurances of planned improvement by the Nigerian authorities, was more than 10 per cent compared to the previous month.

However, with an estimated price of $100 per barrel for the period, the review showed that while a $46.62 billion gross value was supposed to be realised from sales of 1.88 million barrels in eight months, only $28.3 billion was realised, as the country continued to experience production shortages.

On a daily basis, production for July 2022 averaged 1.083 million barrels per day; in June the country’s production was 1.158 million bpd; it was 1.024 million bpd in May; 1.219 million bpd in April, 1.237 million bpd in March; 1.257 million bpd in February and 1.398 million bpd in January.

The quota given by the Organisation of Petroleum Exporting Countries (OPEC) to the country for the month of August was 1.826 million barrels per day, meaning that Nigeria under-produced to the tune of about 853,606 bpd last month.

But the country has recently taken a rash of measures to curtail the oil theft menace, which so far appears to have defied all solutions.

A few of the measures include the renewed deployment of security personnel in the Niger Delta and the real-time monitoring of activities around the pipelines by the Nigerian National Petroleum Company Limited (NNPCL).

In addition, the national oil firm has introduced the whistle-blower strategy as well as the handing over of a N4 billion monthly surveillance contract to ex-militant, Government Ekpemupolo, popularly known as Tompolo.

The federal government has variously blamed massive oil theft, vandalism of major assets, dilapidated infrastructure as well as declining upstream investment for its inability to drill more of the commodity.

Still on the latest data from the NUPRC, whereas the monthly production projection in the 2022 budget was 58.2 million barrels given the 1.88 million barrels per day forecast, the actual output for the period told a different story.

A breakdown of the data indicated that there has been a steady decline in production levels. In January, total crude oil production output was 43,353,723 barrels; in February, it was 35,217,997 barrels while in March, production was 38,364,770 barrels.

In April, production fell to 36,576,449 barrels; in May, it fell further to 31,755,488 barrels while in June, July and August, the data showed that output were 34,748,214; 33,600,878 and 30,144,212 million barrels respectively.

Speaking on the situation recently, the Group Chief Executive of the NNPCL, Mallam Mele Kyari said the increasing rate of vandalism had caused massive disruptions in oil production noting that it was the worst the country had ever witnessed.

 “As we speak now, there is 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,” he stated, but added that the company was “not hopeless.”

A significant improvement may, however, be experienced soon when the repair work on Forcados, a key Nigerian oil terminal is expected to be completed in late September, comes on stream.

The repairs to a subsea hose have stopped exports of Forcados crude, which is the single largest export grade.

Last week, THISDAY reported that with an estimated average oil price of $100 for the month, the country lost as much as $756 million to shut-ins in July, according to an analysis of data from NNPCL.

Aside the Forcados terminal which curtailed supply to the tune of 258,000 barrels as a result of the closure of the facility, following reports of a ‘sheen’ in the vicinity of the facility, a number of other facilities have also been negatively impacted. The Forcados asset is operated by Shell Petroleum Development Company (SPDC).

Bonny terminal has also been taking a hit, with force majeure declared as a result of the shutdown of the terminal. The facility lost a humongous 3.545 million barrels in July.

Nigeria, Africa’s largest oil producer and a member of the Organisation of Petroleum Exporting Countries (OPEC) has tried to stamp out sabotage on its pipeline network in recent years without much success.

Some operators have said they receive as little as 5 per cent of crude volumes pumped through the TNP pipeline, for instance, reflecting a larger issue for the country which is already facing shrinking investment in the sector.