Nigeria loses N636bn revenue as oil production dips

The repeated slump in Nigeria’s monthly oil outputs since January 2024 has resulted in a revenue loss of about N636.3bn, findings by Sunday PUNCH show.

Oil production data obtained from a Federal Government agency indicated that Nigeria produced 1.43 million barrels of crude oil (excluding condensates) in January this year, but this nosedived to 1.25mbpd in May.

Figures obtained by our correspondent from the Nigerian Upstream Petroleum Regulatory Commission showed that while the total volume of crude produced in January was 44.22 million barrels, it dropped to 38.8 million barrels in May.

This represents a crude oil production plunge of 5.43 million barrels between January and May this year, based on NUPRC data.

The average cost of Brent, the global benchmark for crude oil in January was $80.12/barrel but moved up marginally to $81.75 in May, according to data from Statistica, an international statistical firm.

Also, the average exchange rate of the naira against the dollar in May this year was 1,434.1/$. The naira has been struggling since the Central Bank of Nigeria harmonised the country’s foreign exchange markets on June 14, 2023.

Based on the 5.43 million barrels crude oil production plunge, the price of Brent and the exchange rate of the naira in May, Nigeria lost an estimated revenue of about N636.3bn between January and May this year.

Meanwhile, it was further observed that while Nigeria produced 1.43mbpd of crude oil in January, this dropped to 1.32mbpd in February, crashed to 1.23mbpd in March, rose a little to 1.28mbpd in April, before falling to 1.25mbpd in May.

The continued plunge in Nigeria’s oil production has been blamed on the incessant vandalism of oil pipelines and crude oil theft.

The government has been making efforts to address this issue, although it has not been as successful as anticipated.

On June 13, 2024, for instance, the Nigerian National Petroleum Company Limited urged the judiciary to create a special court to try culprits of oil theft and pipeline vandalism.

NNPC’s Group Chief Executive Officer, Mele Kyari, made the plea at the National Judges Capacity Building Workshop on the Petroleum Industry Act 2021, organised by the National Judicial Institute and INVESTIN 234 in Abuja.

Kyari also urged the judiciary to accelerate hearings on offences related to crude oil theft and pipeline vandalism, according to a statement issued by the spokesperson of NNPC, Olufemi Soneye, at the time.

The NNPC helmsman further called for the support of the judiciary in tackling the twin challenges of crude oil theft and pipeline vandalism for the oil and gas industry to achieve its full potential as an enabler of national economic and industrial growth.

Our correspondent had exclusively reported that major oil companies lamented the impact of oil theft and pipeline vandalism on the availability of crude for local refineries.

The Director-General of the Lagos State Chamber of Commerce and Industry, Dr Chinyere Almona, identified crude oil theft and pipeline vandalism as factors hindering the oil majors’ inability to meet their daily quotas.

She also explained that modular refineries were finding it hard to get enough crude.

She also identified low crude oil production in Nigeria as a factor limiting international oil companies’ capacity to supply crude to the Dangote Petroleum Refinery, and other modular refineries.