FG Blames Vandalism, Theft, Subsidy As Nigeria’s N9trn Oil Revenue Becomes Threatened

Nigeria’s oil production slumped by 28 million barrels between January and July 2022, threatening the Federal Government’s N9.37tn oil and gas revenue target by the end of the year.

The Federal Government, in the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper recently presented by the Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, blamed oil production shut-ins due to pipeline vandalism, crude oil theft and high petrol subsidy cost.

Most industry experts also attributed the decline to oil theft, which appears to have defied solutions.

After posting a high crude oil production figure of 1.399 million barrels per day in January 2022, Nigeria’s production crashed to as low as 1.084mbpd in July.

By dropping from 1.399mbpd in January to 1.084mbpd in July, it means the country lost about 315,000 barrels of crude oil daily, amounting to 28.4 million barrels of oil during the six months interval.

Findings from various monthly oil production reports of the Organisation of Petroleum Exporting Countries indicated that Nigeria actually stepped up its output from 1.197mbpd produced in December 2021 to 1.399mbpd in January 2022.

But this could not be sustained, as the country’s oil production commenced a descent in February, dropping to 1.258mbpd and crashed further in March to 1.238mbpd.

The plunge continued in April and May, as the country produced 1.219mbpd and 1.024mbpd in the respective months.

The country’s oil production moved up marginally in June, rising to 1.158mbpd, but this was short-lived, as it eventually dropped to 1.084mbpd in July this year.

OPEC explained that the crude oil production figures were based on direct communication. Data from the global oil group further showed how Nigeria’s quarterly oil production moved up from 1.26mbpd in the fourth quarter of 2021 to 1.299mbpd in the first quarter of this year.

But it dropped to 1.133mbpd in the second quarter of 2022, a development that operators in the sector and government officials repeatedly attributed to massive crude oil theft.

The Group Chief Executive Officer, Nigerian National Petroleum Company Limited, Mele Kyari, stated on Friday that the NNPC was partnering with security agencies and other stakeholders to tackle the menace.

Read Also: Oil Sector Contribution to GDP Will Decline by 5% in 2025 – Minister

The NNPC boss also cautioned refineries outside Nigeria that patronised dealers of stolen crude oil, insisting that the commodity was not refined in Nigeria due to the non-functional refineries across the country.

“We are also creating a platform where end-users, particularly refiners and traders, can validate if the crude they are handling from Nigeria is from genuine sources and whenever they have a non-validated product, they have an obligation to report to the necessary authorities in the world,” Kyari stated.

He added, “If they don’t do this, then the culprits are international. That means they are part of the ring and whenever we discover this, we will take necessary actions against such culprits.

“And I’m sure our partners will cooperate with us to make sure that this is done.”

This, according to Kyari, was because such massive oil theft could not succeed without international collaboration.

“It is impossible for any refinery to take crude oil that they don’t know its source. It is not possible,” he stated.

The NNPC helmsman added, “Refineries are designed to process a certain specific grade of crude. They know which crude they are processing. If it is from Nigeria, every refinery knows that it is from Nigeria.

“And it is their (refineries) duty to ensure that they validate this because we have a unique number for every cargo that leaves this country.”