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Nigeria again lost a whopping $650.7 million to crude oil losses resulting from declaration of force majeure, equipment failures and host communities’ disturbances between the April and May production cycle.
When converted to naira, the country’s local currency, using the official exchange rate of N420/$, the amount Nigeria lost for the period was an estimated N273,296,023,560.
On the average the price per barrel of oil, according to a THISDAY review, sold for approximately $114 last month.
To put it in proper context, the gross domestic crude oil and gas revenue from sales for the entire month of May was N426.14 billion, the highest in months.
The amount of oil lost during the period extracted from the Nigerian National Petroleum Company Limited (NNPC) presentation to the Federation Account Allocation Committee (FAAC) excluded the massive volume stolen in the Niger Delta region.
The document detailing the national oil firm’s activities for May, showed that over 5.707 million barrels of oil were lost to the breakdown of production equipment, protest from community workforce arising to shutdowns as well as a fire outbreak at one of the terminals.
Still struggling with meeting its oil production quota, the Organisation of Petroleum Exporting Countries (OPEC) last week revealed that Nigeria reported a paltry 1.024 million barrels per day production in May, a multi-year low. With the latest figure released by the OPEC, it meant that Nigeria’s underperformance was as high as 700,000 barrels per day for the month, although the cartel’s total allocation to Nigeria exceeded 1.75 million bpd for the month.
The 1.024 million bpd production (through primary communication) was about 195,000 bpd less production when compared with the April’s total of 1.219 million bpd, OPEC said.
Despite assurances by the various government agencies, what the OPEC figures implied was that rather than improve, the country’s oil production has actually deteriorated in the past months.
Although the authorities have always fingered massive theft as one of the reasons for its inability to meet its quota, the areas rarely discussed include incessant equipment failure and prolonged maintenance of broken down facilities.
On the issue of theft, the federal government had also months ago, deployed heavy military presence in the Niger Delta to curb the menace.
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But the OPEC data confirmed that the action has not made any difference, as nothing appears to have changed since the rejigging of the security arrangement in the region.
Specifically, the biggest loss for the period, according to the latest NNPC document, came from the force majeure declared at the Bonny terminal since March 2022. For the entire month, Nigeria lost 3.450 million barrels of oil from the facility.
Force majeure refers to a clause in contracts that allows both parties to walk out of the contract when an extraordinary event or circumstance beyond the control of the parties happens.
The report stated that crude oil production at the terminal has now dropped significantly to as low as three million for the period while the terminal operator has temporarily halted operations.
The next biggest curtailment of production came from Odudu terminal with a total of 937,663 barrels of crude oil shed by the country due to maintenance work on the facility.
In Yoho and Excravos terminals respectively, the country’s production was curtailed to the tune of 56,000 barrels and 53,000 barrels to low production due to flare management as well as community crisis at the south swamp. Bonga lost 174 barrels to repair work.
Furthermore, Brass lost 180,000 barrels due to a failed equipment, Jones creek terminal lost 809,600 barrels due to shut-in resulting from a combination of broken down equipment and community workers’ protest while Ukpokiti and Aje were curtailed to the tune of 210,000 and 11,000 barrels respectively.
Nigeria has some of the most preferred crude in the world since most of it is free of sulphur and remains the largest producer of sweet oil in OPEC. The country’s sweet crude oil is known as Bonny Light.
The country has a number of petroleum terminals run mostly by International Oil Companies (IOCs) like Shell, Mobil, Chevron, Texaco, and Agip.
THISDAY had reported how with over 3.65 million barrels of crude oil shut-in at the Bonny Terminal during the March/April productions circle, Nigeria’s total losses, month-on-month rose by over 300 per cent.
Overall, between March 3 and April 1, the production curtailment pushed the country’s total loss to 5.545 million barrels of crude for that month as opposed to 1.69 million barrels previously.
