Nigeria’s crude oil production slumped below one million barrels per day in August 2022, the lowest in at least 30 months, Okechukwu Nnodim reports

Crude oil production in Nigeria dropped again in August 2022, crashing below one million barrels per day to 972,394 bpd, the lowest recorded in years.

The latest figures obtained in Abuja on Thursday from the Nigerian Upstream Petroleum Regulatory Commission indicated that the country’s oil production dropped from 1,083,899 bpd in July to 972,394 bpd in August.

Hence, Nigeria lost about 111,505 barrels of crude oil daily in August, as it was also gathered that the Nigerian National Petroleum Company Limited went to the Federal High Court to canvass special tribunal for the speedy trial of crude oil thieves and pipeline vandals.

Documents obtained by our correspondent showed that while the total crude oil production in July 2022 was 33,600,878 barrels, this slumped to 30,144,212 barrels in August, indicating a loss of 3,456,666 barrels in one month.

Data compiled by countryeconomy.com, an international analytical firm, showed that the average price of Brent, the global benchmark for crude, was $100.5/barrel.

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Therefore, by losing 3,456,666 barrels in August, Nigeria lost $364.68m or N155.87bn (at Thursday’s official exchange rate of N427.43/$) in the month under review.

An analysis of the 2020, 2021 and 2022 crude oil and condensate production reports for Nigeria showed that the 972,394 bpd produced in August 2022 was the lowest ever in these years.

All the figures for oil production in 2020 and 2021 through January to July 2022 were above one million barrels per day, but this dropped below the 1mbpd mark in August 2022.

From January, February, March and April 2022, for instance, the country’s crude oil production (without condensates) were 1.39mbpd, 1.26mbpd, 1.24mbpd and 1.22mbpd respectively.

In May, June and July 2022, the figures were 1.02mbpd, 1.16mbpd and 1.08mbpd respectively. But this dropped below 1mbpd in August to 0.97mbpd.

The reason being given daily for the slump in Nigeria’s oil production is oil theft but the stealing of crude has refused to abate.

This made the Petroleum and Natural Gas Senior Staff Association of Nigeria to threaten that it would stop producing oil across the country if the Federal Government failed to nip the menace in the bud.

PENGASSAN commenced rallies in various states on Thursday to protest the continued stealing of crude, as it blamed soldiers and other security agents for conniving with thieves to perpetuate the crime.

The association’s President, Festus Osifo, said the majority of Nigeria’s oil exploration activities on land were currently shut due to massive oil theft in the Niger Delta.

“We’ve had meetings with the security agencies and captains of industry on what could be done to end oil theft, but these meetings seem to be yielding no result,” he stated.

Osifo added, “We now think that engaging behind the four walls of the office is not enough, because our engagements with those in government have not yielded any meaningful result.”

He observed that crude oil price had tended higher than $100/barrel, adding that many oil-producing countries were taking advantage of this, but the reverse was the case with Nigeria as the country had remained broke.

The PENGASSAN president said the Federal Government borrowed over N6tn to finance the country’s 2022 budget, whereas “if we (Nigeria) are able to produce up to 1.9mbpd, we don’t have any need to go borrowing that much.”

Osifo stated that the massive oil theft had affected other sectors of the economy, stressing that manufacturers could hardly borrow money from deposit money banks because the government was currently crowding them out.

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“Banks now lend money to the government at the expense of private businesses and manufacturers, because the government is the one that can pay. It can print money to settle the debts at the expense of manufacturers,” he stated.

He urged the Federal Government to wake up and address the menace of oil theft in order to avert a total grounding of crude oil production by oil workers nationwide.

In a bid to tackle the concerns, the NNPC tweeted on Thursday that its Group Chief Executive Officer, Mele Kyari, met with the Chief Judge of the Federal High Court of Nigeria, Justice John Tosho.

It said the meeting was to seek the support of the judiciary for a special court on oil theft and pipeline vandalism.

The company said, “Earlier today, the GCEO @nnpclimited, Mele Kyari, paid a courtesy call on the Chief Judge of the Federal High Court of Nigeria, Justice John Tosho.

“During the visit, the GCEO sought the High Court’s support towards the creation of a special court/tribunal to ensure speedy trial of crude oil thieves and pipeline vandals.

“The GCEO, who described these actions as a serious threat to Nigeria’s oil production, revenue generation and by extension energy security, observed that a special court to execute such cases will deter would-be criminals and assure investors of value for their investments.”

A document released recently by the NUPRC revealed that crude oil theft had severely limited the country’s earnings from oil sales.

In the document, the commission’s Chief Executive, Gbenga Komolafe, however, stated that efforts were being intensified to curb the menace.

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He said, “In line with Mr President’s directive, the commission has evolved additional initiatives further to collaborate with oil and gas operating companies (including NNPC) and the top echelon of Nigerian security forces to put an end to the menace of crude oil theft in the interest of the nation.”

Komolafe said the NUPRC had commenced the validation of crude oil volumes and assessment of upstream assets integrity audit.

“The commission has commenced a full-scale audit of crude oil theft and assessment of upstream assets integrity audit to establish actual crude oil theft figures in the upstream petroleum industry,” he stated.

Komolafe added, “This is in view of recent controversial figures on theft volumes thrown up by some industry operators, which impact negatively on federation revenue. This is very important as the nation derives its royalty from net crude oil receipts.”

The NUPRC boss also stated that the commission would be implementing an advanced cargo declaration regime.

He said, “The commission obtained necessary approvals to implement advance cargo declaration regime in upstream petroleum operations to curtail the export of stolen crude oil.

“This is by ensuring that crude oil and gas cargoes exported from Nigeria will have a unique identifier that confirms all documentation as regards the exported consignment.

“This implies that any cargo that does not have the unique identifier was not legitimately exported from the country.”

On his part, a former President of the Association of National Accountants of Nigeria, Dr Sam Nzekwe, stated that the government must end oil theft to save Nigeria from such humongous financial losses.

“Nigeria needs all the revenue it can get now, so nipping oil theft in the bud is paramount and must be addressed by the Federal Government as fast as possible,” he stated.

According to The PUNCH, in March this year, the total value of Nigeria’s crude oil stolen between January 2021 and February 2022 was about $3.27bn (representing N1.361tn at the official exchange rate of N416.25 to the dollar).

International oil companies and their counterparts in Nigeria said the massive oil theft across the country currently posed a threat to not just their existence but to the Nigerian economy.

The Federal Government, through its NUPRC, had disclosed the oil theft value during a meeting with the Oil Producers Trade Section, as well as the Independent Petroleum Producers Group in Abuja.

OPTS is a body comprising IOCs operating in Nigeria, while IPPG is an association of indigenous exploration and production companies.

A presentation by the NUPRC at the event indicated that oil theft rose sharply between 2021 and 2022, as an official of the IPPG stated that about 91 per cent of total crude produced at the Bonny Terminal was stolen in January 2022.

In its report on the trend in oil theft, the NUPRC had said, “Total value loss for the period January 2021 to February 2022 is about $3.27bn.

“Average monthly value loss for the period is about $233.99m. Average daily value loss for the period is about $7.72m.”

It added, “Losses are mainly from Bonny Terminal Network, Forcados Terminal Network (and) Brass Terminal Network.”

The commission had outlined factors that aided crude oil theft to include: inadequate security, poor community engagement, economic challenges, poor surveillance, stakeholder compromises and exposed facilities.

The OPTS Chairman, Rick Kennedy, who doubles as Managing Director, Chevron Nigeria Limited, and represented IOCs at the meeting, had described the massive oil theft across the country as an organised criminal activity.

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Kennedy, who was represented by the Managing Director, ExxonMobil Nigeria, Richard Laing, had said, “When I say it is organised criminality, the sophistication of the engineering involved points towards a high degree of sophistication and technology, as well as the distribution.

“I think we’ve just got to be honest and accept that this is not theft but more than that.”

The IOCs called for a quick solution to the menace, stressing that the development posed a serious threat to their existence.

“It is important that the Federal Government, industry, and a whole bunch of other stakeholders find a solution and find it quickly. That will be my strong advice,” Laing had stated.

PUNCH.