26 August 2013, Lagos – Nigeria’s revenues plunged by 42 per cent in July due to oil theft and production outages, the accountant general said on Friday, underscoring how oil theft is damaging public finances this year. State revenues fell to N498 billion, the lowest monthly earnings this year and down from 863 billion naira in June. Oil theft has cut government earnings in several months this year, and by more than last year, and July was particularly badly hit.
Military in the restless Niger Delta say they are renewing efforts to catch oil thieves, while the Oil Minister Diezani Alison-Madueke says she is reaching out to foreign governments to help stop the buying of Nigeria’s stolen oil. “This was due to continuous theft of crude oil, leakages, pipeline breaks at various terminals, compressor failure and repair work,” Accountant General Jonah Otunla told reporters. Shell Nigeria shut its 150,000 barrel per day Trans Niger pipeline on July 11 after a leak was detected; barely a week after the company re-opened the pipeline following the repair of some crude theft points.
Criminal gangs frequently tap into exposed pipelines in the winding waterways and swamps in the Niger Delta, siphoning off tens of thousands of barrels a day. Nigeria lost out on $10.9 billion in potential oil revenues due to production losses caused by theft and sabotage between 2009 and 2011, an audit showed last month. A total of 715.8 billion naira was distributed to local, state and federal governments in July, down slightly from 718.1 billion in June, Otunla said.
The excess crude account, where Nigeria saves oil revenues over a benchmark price, holds $5.1 billion currently, compared with $9 billion at the end of last year, data showed on Friday. Nigeria is aiming to cut its budget deficit to 1.85 percent of gross domestic product this year, from 2.85 percent in 2012. Oil accounts for around 80 percent of government revenues and the crude savings account is often used to fund the budget deficit if oil revenues fall below target.
Meanwhile, Nigeria’s Bonny Light oil exports are projected to fall in October. Nigeria will export 95,000 barrels per day of the Bonny Light crude oil grade in October, a provisional shipping list showed on Friday, down from a planned 127,000 bpd in September. The Bonny Light grade, operated by Shell , has been under force majeure since April. A force majeure relieves companies of their contractual obligations. A firm may opt to keep it in place if it can only partially meet commitments.