Crude Oil Price Drops To $86 Per Barrel

Brent, the global benchmark for crude, dropped in price on Sunday as virtually all oil grades witnessed reduced prices on the first day of the week despite efforts by the Organisation of Petroleum Exporting Countries (OPEC) to stabilise the cost of the commodity.

As oil prices plunged, data obtained from the September 2022 Oil Market Report of OPEC indicated that an oil rig in Nigeria was dormant in August 2022 when compared to the number of functional rigs in the preceding month.

Industry figures seen in Abuja on Sunday showed that Brent dropped in price by $4.31 or 4.76 per cent to $86.15/barrel as at 4.18pm Nigerian time.

WTI crude lost $4.75 or 5.69 per cent to close at $78.74/barrel, while the cost of oil grades in OPEC Basket dropped marginally by $0.24 or 0.25 per cent to close at $96.31/barrel.

Data from OPEC’s World Rig Count on operational rigs in Nigeria as at August this year indicated that the number of functional rigs in the country reduced from 11 in July to 10 in August.

The organisation stated that in 2019, the average number of functional oil rigs in Nigeria was 16, but this dropped to 11 in 2020, before eventually crashing to seven in 2021.

In the first and second quarters of 2022, the average number of Nigeria’s functional oil rigs was put at eight and 10 respectively.

OPEC’s data indicated that the functional rigs increased to 11 in July this year, but this was not sustained, as it again dropped to 10 in the succeeding month of August.

The major reason for the dormancy or halt in the operations of Nigeria’s oil rigs was the alarming rate of crude oil theft.

The Federal Government, oil unions, military, among other stakeholders, have repeatedly expressed concerns about this.

The Petroleum and Natural Gas Senior Staff Association of Nigeria, for instance, recently stated that some oil companies had to shut-in some of their oil wells following the persistent theft of crude.

PENGASSAN also stated that the military should be made to explain how huge volumes of oil were stolen from the Niger Delta despite the protection of oil installations by their personnel.

The National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, told our correspondent that though there might be some inconsistencies in oil theft data, the volume of crude stolen from the country was huge.

He said, “On the quantity of oil being stolen from Nigeria, the various figures you see are all estimated figures. There is no accurate gauge to measure the volumes of crude oil being stolen in this country, because we don’t have a standard measuring system.

“But because of the recent incident of a vessel that was intercepted for allegedly trying to steal crude oil from Nigeria, we think that a measurable quantity of our crude oil is not accounted for.”

He added, “I also know that Nigeria is losing a lot of revenue from this oil theft and stakeholders are not happy with the way the cartel who are involved are handling the matter.

“It is, therefore, pertinent that the Federal Government should come out with a standard measuring instrument that will give the exact number of daily production, export consumption and the amount being reserved, as well as what we channel for local use.”

PENGASSAN recently staged protests in Abuja, Lagos, Kaduna, Warri, among other locations, to kick against the continued theft of crude oil in Nigeria.

Also, the Executive Secretary, Nigeria Extractive Industries Transparency Initiatives, Ogbonnaya Orji, said in an interview that the 2021 audit report of the oil sector would be ready this year to ascertain the level of oil theft across the country.

“We want to establish the quantity of crude that is produced, how much of that can be accounted for and how much was stolen,” he stated.

Orji added, “We should establish the amount that was exported, reserved for local consumption and how this was reserved or managed.”