Road Accident Claims Four Persons in Ogun
Let’s Work Together to Make Oyo Better, Makinde Tells Folarin, Adelabu
Boris Johnson, Sanwo-Olu to Address 16th Anyiam-Osigwe Lecture in Lagos
With 23.7m Barrels Output Deficit in 2023, Nigeria Records N920bn Loss in Oil Revenue
Emmanuel Addeh in Abuja
Against the 1.69 million barrels per day oil production benchmark in the 2023 budget, Nigeria recorded an output deficit of about 23.7 million barrels of crude oil production in January and February 2023, valued at about N920 billion at the official exchange rate of N460/$.
The Nigerian government had earlier agreed on a daily oil output of 1.69 million bpd as against the Organisation of Petroleum Exporting Countries (OPEC) 1.8 million bpd at $75 per barrel.
But even that conservative production figure has been elusive, with latest data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicating a 1.3 million bpd drilling in February, the best effort in over a year.
A THISDAY’s computation of the data from the industry regulator showed that of the 52.4 million barrels expected cumulative production in January, Nigeria only struggled to drill 36.57 million barrels, while in February, whereas it was supposed to be 47.3 million, being a 28-day month, Nigeria only produced 39.02 million barrels.
However, February’s volume of 1.3 million bpd was an improvement in output in over a year, as Nigeria had not produced that much crude since at least January 2022 even as production fell to as low as 900,000 bpd at some point in the last quarter of last year.
The data reviewed by THISDAY further showed that following the budget for 2023, in the two months of January and February, the country should have exported a total volume of an estimated 99.7 million barrels if it produced its expected crude oil volume, but ended up drilling 76 million barrels in both months.
With the huge deficit recorded in January and February despite the rise in production and against the $83 price per barrel of oil for both months, the analysis showed that calculated against the 23.7 million barrels deficit, the country lost as much as $2 billion in gross revenue, translating to about N920 billion at the N460 to a dollar official exchange rate.
But in spite of the underproduction in both months, the February data indicated that the largest volume of production came in from Forcados with 6.93 million barrels during the month, followed by Escravos terminal with 4.03 million barrels during the period.
But when condensates are added, Nigeria produced 46.3 million barrels in January, while in February it drilled 43.3 million barrels. That is 1.5 million bpd in January and 1.54 million bpd in February.
Although crude oil production has generally improved in the last couple of months, Nigeria’s oil sector challenges had worsened mostly in parts of 2021 and 2022, with production hitting a record low of 972,394 barrels per day in August last year and plunging to a new record low of 937,000 in September.
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 in the $80s, has been severely challenged by a horde of issues, oil theft being one of the most prominent.
Another critical challenge has been the years of underinvestment in the sector, now made worse by the rush by the global West to impose their exit from the use of hydrocarbons to investment in renewables on the so-called third world countries.
Although the Nigerian National Petroleum Company Limited (NNPC) has in the last three months consistently pegged Nigeria’s production at 1.6 million barrels per day, the regulator of the industry, the NUPRC has been more conservative. The commission put the figure at 1.258 million in January and 1.3 million barrels per day in February.
However, the NNPC’s calculation may have included condensates excluded from OPEC’s production computation.
Aside marshalling its security assets to curb the unprecedented leakage of Nigeria’s oil, the Nigerian government has also said it can now monitor any breach on the country’s pipelines in real-time.
The effect of that however remains to be seen, as the breach of the country’s oil assets in Rivers State, which recently claimed 12 lives appeared not to have been detected by the so-called 24-hour automated surveillance system.
The NNPC also recently announced that it had floated a whistle-blowers policy, which seeks to reward persons who anonymously report persons who vandalise the country’s pipelines or steal Nigeria’s crude oil.
But the Group Chief Executive Officer of the NNPC, Mallam Mele Kyari believes that although Nigeria struggled to achieve its OPEC quota in 2022, it was set to hit and exceed OPEC’s quota in 2023.
“For us, we see a trajectory of restoring production, including condensates within the year definitely. And we believe that we can hit our target of 2.2 million barrels per day, although now our OPEC target is 1.8 million barrels per day. We know that it’s practical to do 2.2 million barrels per day.
“We took definite steps to increase production and this is paying off. Around July, our net crude oil excluding condensate came down to around 1million bpd. That has been restored,” Kyari said.
According to him, the government had also taken very practical steps around pipeline security. In August 2022, a high-ranking federal government delegation struck a deal with a former militant-turned security contractor, Government Ekpemupolo, also known as Tompolo, to crack down on oil theft.
“It’s practical to hit 2.2 million bpd in 2023, this is practical. It’s a moving target,” Kyari said, adding that: “There are a number of projects that I have clear line of sight that can come on board in 2023.”