OPEC confirms drop in Nigeria’s crude oil production, says output declined to 1.354mbpd in March

Organisation of the Petroleum Exporting Countries (OPEC) said Nigeria’s crude oil production dropped to an average of 1.354 million barrels per day (mbpd) in March, this year.

OPEC which made this known in its Oil Market Report for April released, Tuesday, said the figure showed a decrease of 24, 000 barrels per day when compared to the 1.378m bpd produced averagely in the month of February.

Nigerian government had earlier admitted the drop in production as it blamed crude oil theft for the low output, while also attributing the situation to vandalism and attacks on installations across the Niger Delta region.

It would also be recalled that the country’s output declined to an average of 1.417 million barrels per day in February 2022, according to OPEC.

This figure represents about 463, 000 barrels per day lower than the 1.88 million barrels per day approved by the Federal Government in the 2022 budget.

The Nigeria Extractive Industries Transparency Initiative ((NEITI) 2020 Oil and Gas Industry Report made public in Abuja, Monday, March 7, 2022 by the agency’s Executive Secretary, Orji Ogbonnaya Orji showed that 39.16mmbls of crude valued at US$44.73million (N15.71billion) was stolen with 349 cases of pipeline vandalism recorded in 2020.

“According to secondary sources, total OPEC-13 crude oil production averaged 28.56m bpd in March, higher by 57 tb/d month-on-month.

“Crude oil output increased mainly in Saudi Arabia, Kuwait and the United Arab Emirates while production in Libya, Nigeria and Congo declined,” it said.

The report noted that following a contraction of 1.8 per cent year-on-year in 2020, Nigeria’s economy expanded by 3.6 per cent in 2021.

It said this economic recovery was most likely to continue over the course of 2022 with support from improvements in the hydrocarbons sector and energy prices.

“Recent official data suggested that the annual inflation rate edged up slightly to 15.7 per cent in February 2022 from 15.6 per cent in January, although food inflation remained elevated.

“Indeed, higher food costs related to geopolitical tensions could further fuel inflation.

“In March, the overall business improvement softened as Stanbic IBTC Bank Nigeria’s Purchasing Managers’ Index suggested, indeed it dropped to 54.1 from 57.3 in February.

“Yet, the overall prospects for Nigeria’s short-term economic outlook remain positive, despite concerns over inflationary pressures amid disruptions to global trade flows and supply shortages,” the report said.

It would be recalled that President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, while addressing the media, last month, in Lagos, said the country was losing close to 500,000 barrels of crude oil per day to theft and pipeline vandalism, alleging high-level collusion by stakeholders in Niger Delta.

Osifo at the briefing, said: “The issue of crude oil theft has been exacerbated in recent times. This has made Nigeria lose out on accruing more revenue from the current high price of crude oil in the international market.

“We currently produce an average of 1.2 million to 1.3 million barrels of crude oil daily from a capacity of about two million barrels of crude oil per day. From October 2021 to February 2022, between 90 and 99 per cent of crude oil pumped into the Trans National Pipeline, TNP, by operators was vandalised.

“Reconciliation/fiscalization at Bonny terminal shows that between five and 10 per cent of crude oil metered from the operators gets to the terminals. Nigeria is losing close to 500,000 barrels of crude oil daily to theft and pipeline vandalism.

“Another problem arising from vandalism is that companies are forced to go into curtailment when these assets/export pipelines are damaged as they cannot export what they produce, thereby incurring production losses. An operator loses an average of 10 days of production shut-in every month due to vandalism.

“Recent preliminary work showed that about 150 illegal tapings were used in siphoning crude oil from the TNP. This has forced all operators injecting crude into the TNP to suspend export/injection thereby shutting-in production. TOTAL Energies and SPDC, for example, stopped production into the TNP pipeline while Agip ENI declared force majeure on their brass terminal.

“Beyond the reduction in revenue to the operating companies and the country, this act of sabotage has caused serious environmental degradation to the host communities and region. The health implication of this unholy act will be monumental in years to come. We suspect high level collusion among stakeholders in Niger Delta.

“As a matter of urgent national importance, the association hereby asks the Federal Government to work with stakeholders in the oil and gas industry as well as the national security architecture to find a lasting solution to this menace that is almost bringing the oil and gas industry to its knees.

“It is our expectation that the pipelines integrity will be sound enough to enable safe transportation of crude and products all over the country, while government establishes a special force committed to strict enforcement of Pipeline Right of Way. Pipeline installation can now be done using state-of-the-art technology in a manner that will be inaccessible to vandals.

“We expect that the managers of the pipelines imbibe the culture of regular maintenance while the government will live up to its responsibility of providing adequate security. Security agencies should be empowered to ensure regular surveillance of the pipelines to detect and prevent vandals’ action and there should be periodic movement of the personnel to discourage them from compromising the security of the assets.

“We also call on the government to review the enabling legal instruments for sanctioning violators/defaulters.”

On its part, the Pan Niger Delta Forum (PANDEF), in a statement, last month, accused security agencies of working in connivance with operators to steal crude oil.

National Publicity Secretary of PANDEF, Ken Robinson, in Port Harcourt, Rivers State, in March, said

“The truth of the matter is that some security agencies in connivance with operators of the oil sectors are the ones stealing our crude.

“As we speak now, you will be surprised to know that thousands of barrels of crude are being illegally escorted from the Nigerian waterways to the deep seas and taken out of Nigeria by officials of the oil industries.

“These things cannot happen without an internal connivance. The minute activities of our young men who for out of frustration, anger and lack of what to do, without in anyway supporting those activities, that go into illegal refining of products, is like 0.1 per cent of the oil theft that is going on.

“The outrageous, humongous figures that government says they lost through stolen crude are not from the little amount of crude that is used by the illegal refining of crude in Niger Delta.

“The bulk of the illegal bunkering is supported by those who work in the oil industries, because they know how these things are done,” the group said.

Early last month, businessman and Chairman of Heirs Oil and Gas, Tony Elumelu, lamented that between January and September 2021, Nigeria lost about $4 billion to crude oil theft alone.

This amount, when converted based on the N416.25 official exchange rate of the Central Bank of Nigeria translates to about N1.66 trillion

Elumelu, while speaking on the impact of crude oil theft, had said: “Theft in the Niger Delta is a national menace. We (Heirs) will produce crude oil and the thieves will steal like 50,000 barrels per day. “In my opinion, it is one of the most lethal threats to our country because there is so much money in the hands of people who don’t pay taxes and people you don’t regulate. The country is not safe.”