Nigeria lost over N1.1 trillion in oil revenues in the last five months due to NigerDelta militants’ attacks on oil installations. The figure does not include losses in gas revenues resulting from disruptions in gas supplies to domestic power and industrial plants as well as export markets.
According to Daily Trust, there were at least 28 attacks on oil infrastructure between February 10, 2016 and end of last month by the NigerDelta Avengers.
The militant group had announced a ceasefire as the Nigerian military began Operation Crocodile Smile, which is aimed at ridding the oil region of militancy.
The 2016 budget is based on daily crude production of 2.2 million barrels per day but the attacks pushed output down by about a third between April and August 29.
Production dropped by 300,000 bpd in April according to Nigeria National Petroleum Corporation (NNPC) figures.
In May Minister of State for Petroleum Resources Dr. Ibe Kachikwu said production went down from 600,000 bpd to 1.5m bpd.
It again dropped by 700,000 bpd in June, 700,000 bpd in July and last Thursday output was down to around 1.4m bpd with 800,000 bpd lost.
At an average oil price of $42.01 and 46.94/barrel and exchange rate of N197/$ in April and May, the country was denied crude oil revenues valued at $378m or a Naira equivalent of N75billion and N171billion respectively.
According to Central Bank of Nigeria (CBN) and NNPC data, the average price of crude oil in June and July were $48.79 and N41.37 per barrel, while the value of the local currency was estimated at N285 and N292 to a dollar.
The country was therefore denied crude oil revenue valued at N292billion and N262billion respectively.
At about $48.31/barrel and N305 exchange rate, an estimated $112m or N341billionn has been lost in the last 29 days of August.
This puts the total crude oil (excluding gas) revenue shortfall between April and August 29 at N1.14trillion.
The Niger Delta Avengers attacks have cut Nigeria’s output to the lowest in almost 30 years, threatening the projected N820billion oil revenue proposed in the budget for this year.
In the last five months, supply disruptions have significantly affected the country’s oil exports as four of the nation’s five largest export streams have been totally suspended.
Currently, Forcados, Qua Iboe, Bonny Light and Brass River are under force majeure, a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
Shell’s Nigerian unit had declared force majeure on lifting from the Forcados export terminal since February 21 after militants blew up a pipeline feeding the Forcados export terminal, knocking out at least 250,000bpd.
The oil major on August 12, also declared force majeure on exports of Bonny Light crude due to shutdown of the Nembe Creek Trunk Line (NCTL) by the pipeline operator, Aiteo, following a leak.
The declaration came just over a month after it lifted the force majeure it declared on the grade on May 10.
However, Bonny Light exports were continuing via the Trans Niger Pipeline, which had reopened after being closed since early June.
ExxonMobil declared force majeure on shipments of Qua Iboe after a drilling platform ran aground and damaged the pipeline it jointly owns with the NNPC.
Qua Iboe is Nigeria’s largest crude oil stream and exports usually amounting to more than 300,000 bpd.
Its terminal handled 342,000 bpd last year.
It remained unclear whether ExxonMobil would be able to use a smaller alternate pipeline to resume some Qua Iboe exports. No programme has emerged for the grade.
Schedules for Erha and Bonga were also delayed, according to Reuters.
In April, Italian oil major, Eni, declared force majeure on exports of its Brass River grade after a pipeline fire. The suspension was lifted days after. Less than a month, the oil major again declared force majeure, following an attack on a key pipeline at the Brass Rivers terminal.
Nigerdelta Attacks threaten 2016 budget
Explaining the economic effects of the continued attacks, Kachikwu last Thursday said that in addition to price element, the federal government had lost over 50 percent of its income and so too, the states.
“The militancy itself has brought down production from an average of 2.2 million barrels per day to about 1.4 million. And if I consider what I am saying here today, we are probably looking at 1.3 million barrels.
“What it means again, is when you take the cumulative effect of pricing and volume, you are down to more than 60 percent drop on the income of this country.
“You cannot even fund the 2016 budget. If you can’t fund the budget, government does not get money, salaries do not get paid, infrastructures cannot be delivered, development cannot happen,” he said.
Minister of Budget and Planning Udo Udoma recently lamented that Nigeria recorded a revenue shortfall of N1.064 trillion in the first six months of the year or 55% of the country’s projected revenue.
Source: Daily Trust