Despite theft, declining production, Nigeria earned N74trn oil revenue in 65 months

Nigeria’s oil production between January 2020 and May 2022 dropped below the 2017-2019 output by 28 per cent, a trend that authorities have blamed on rising crude oil theft in the oil-producing Niger Delta. In spite of the decline, Nigeria has earned an estimated N74.54 trillion (about $179.53 billion) from the sales of 3.613bn barrels […]

Nigeria’s oil production between January 2020 and May 2022 dropped below the 2017-2019 output by 28 per cent, a trend that authorities have blamed on rising crude oil theft in the oil-producing Niger Delta.

In spite of the decline, Nigeria has earned an estimated N74.54 trillion (about $179.53 billion) from the sales of 3.613bn barrels of crude, blended condensates, and unblended condensates from January 2017 to May 2022.

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This is according to a Daily Trust analysis of data obtained from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Ltd (NNPCL).

According to the breakdown, Nigeria earned N36.64trn (or $88.23bn) from sales of 2.126bn barrels of oil, known as Bonny Light in the global oil market, between 2017 and 2019, at an average of about $70 per barrel of oil.

However, from January 2020 to May 2022, the oil production volume dropped by 1.487bn barrels oil but with a higher oil price of over $80/bl, Nigeria may have earned N37.90trn (or $91.3bn).

The disparity between the first three-year (2017-2019) oil production of 2.126bn barrels and the production figure from 2020 to May 2022 of 1.487bn barrels, indicates a trend of about 28 percent decline or 639bn barrels in oil production and sales.

A year-by-year analysis shows that oil production was 690.465 million barrels in 2017 with earned revenue of $54.25bn at an average of $64.3/bl. The volume then rose to 701.101m barrels in 2018, generating $32.63bn (average $71.3/bl); it peaked at 735.22m barrels in 2019 when Nigeria earned about $34.22bn (average $64.3/bl). However, from 2020, a sharp decline occurred as the oil production volume plummeted to 670.854m barrels with $28.149bn sales proceeds at an average of $41.96/bl. The production volume dropped to 591.199m barrels in 2021 with $41.785bn revenue at an average of $70.68/bl.

For instance, there was a significant drop in crude oil production by 79.655m barrels between the volume recorded in 2020 and that of 2021.

And for this year, the total oil production may further drop as what has been produced in the first five months so far is 225.1m barrels of which the country may have earned an estimated $21.38bn at an average of $95 per barrel.

Compared to the 258.6m barrels of oil production volume recorded from January to May 2021, there is already a 33.5m barrels of oil shortage in this year’s oil production volume.

Authorities have attributed this declining trend to rising crude oil theft with fears that the federal government was already losing the battle.

Who produced what?

From the NUPRC oil production data from January 2020 to May 2022, there were more oil production terminals and streams last year than the figures in 2020 and this year so far. However, the production capacity was higher in 2020 with 26 terminals and streams than in 2021 with 30 terminals and streams.  

A further breakdown indicates that although there were 34 terminals and streams in 2020, 26 of them actively produced the 670.854m oil volume in 2020, leaving out eight others which were Asaramatoru (Ex Ima Terminal), Oyo, Ima, Anyala Madu (CJ Blend), Ukpokiti, Ajapa (Atala Oil), Anambra Basin, and Tulja-Okwuibome streams.

The most active terminals are the Forcados which produced 92m barrels, Bonny produced 89m barrels of oil, QuaIboe (68m bl) and Escravos terminal (54m bl).

And out of the 34 terminals and streams in 2021, only four were shut as the other 30 were active to produce the 591.199m oil volume last year. Ima, Ukpokiti, Ajapa (Atala Oil) and Anambra Basin streams were inoperative. The most active terminals are the Forcados producing 78m barrels of oil, QuaIboe (56m bl) and Escravos terminal (49m bl)

For the first five months of this year, Forcados remained the most active terminal loading 34m barrels of oil, QuaIboe followed with 23m barrels while Escravos terminal trailed with 18m barrels as Bonny terminal had 13m barrels of crude oil.

And from the 34 terminals and streams, eight were shut down between January and May 2022, leaving 26 operation fields that produced the 225m barrels of oil so far. Aje terminal has been shut, while the seven streams without production were Asaramatoru (Ex Ima Terminal), Okwori, Ajapa (Atala Oil), Anambra Basin, Oyo, Ukpokiti and Ima.

The higher closure rate of the oil facilities may spell doom for Nigeria already as the country has struggled but failed to meet the OPEC oil production quota since November 2021.

All fingers point to crude theft

Government officials said crude oil theft is the factor cutting short oil production. NNPC reports show Nigeria has lost crude oil of 112m barrels between 2020 (39.16m barrels) and 2021 (73m bbls), and is losing about 200,000 barrels per day. And although OPEC gave Nigeria 1.753m bbl/day quota in May, Nigeria could not meet up due to the theft as production was at 1.417m bbl/d.

Commenting, the Group Managing Director/CEO of NNPCL, Mallam Mele Kyari, said Nigeria has the capacity to produce about 2.49mbpd of crude if there is no crude oil theft.

Kyari described the menace as a national emergency on account of the proportion, dimension and sophistication it has taken in recent times.

Engr. William Onuh, a biochemical engineer in Abuja, said only urgent actions from the government can curb the situation.

He said: “It actually requires emergency action because for now, the oil fund is the livewire of the country and if this sabotage continues, Nigeria is in danger.

“Let them revisit the pipeline surveillance scheme and evaluate if it is worth it,” Onuh stated.

What N74trn can do for Nigeria

In the first instance, the N74trn estimated to have been earned from oil sales can finance double the 2021 and the 2022 budget to the tune of N30.6tr and totalling N61.2tr. President Muhammadu Buhari approved N17.1trn for this year and N13.5tr for last year.

And if the fund is dedicated only to just one infrastructure at a time, Nigerians can get much more visible benefits. For instance, Nigeria will reduce its housing deficit estimated at 22 million as of 2019 by the Federal Mortgage Bank of Nigeria (FMBN) by 84%. At the Federal Ministry of Works and Housing’s estimated cost of N4m per two-bedroom flat, N74tr can raise 18.5m housing units.

For hospitals, the N74tr can build 3.083m primary healthcare centres at N24m per unit according to the National Primary Health Care Development Agency (NPHCDA), with each of the 774 LGAs getting 3,983 units.

Nigeria’s funding of education is below 10 percent of the annual budget; the 74tr can afford Nigeria to build a 5.482m unit of a block of four classrooms. The Universal Basic Education Commission (UBEC) estimates in 2018 that the cost of building a block of four classrooms is N13.5m.

While the government may have used part of the proceeds to fund the budgets for the years under review while sharing some proceeds with the States and the LGAs through the monthly Federation Accounts Allocation Committee (FAAC), it has drawn from this fund also to subsidize petrol to ensure Nigerians can afford it at N165 per litre. According to NNPCL records, the federal government paid N144.53bn in 2017, N730.86bn in 2018, and N551.22bn in 2019. The government spent N450bn in 2020, N1.573tr in 2021, and is spending N4tr for the 2022 fiscal year.

This story was produced under Dataphyte’s 2022 Media Fellowship.