Nigeria earns N2.7bn extra daily as oil price jumps

Nigeria's Minister of Petroleum Diezani Allison-Madueke speaks at a media briefing on a new gas price regime in the capital of Abuja02 September 2013, Lagos – Nigeria should be drawing an extra N2. 7 billion in daily oil export revenues since the last one week and the amount should climb more in days ahead, as fears over a US-led military strike on Syria escalates oil prices.

Although Syria is not a major oil producer or transit point, investors fear that western intervention there could spill over into the rest of the region, potentially affecting oil supplies from other producers such as Iraq.

The United States has vowed to militarily respond to a chemical weapon attack in that country last week.

After climbing to a two-year high above $112 (N18, 000) a barrel in early trading last Wednesday, Brent crude oil price rose by about 1.5 per cent in London Wednesday near a six-month high level, closing at $114.34 (N18, 500).

The production figures courtesy of the Organization of Petroleum Exporting Countries, OPEC, showed that Nigeria’s daily production capacity declined steadily from about 2.03 million barrels at the beginning of the year to 1.871 million barrels in June and 1.610 million barrels in July.

With current average production capacity of about 1.6 million barrels per day, rough estimates put Nigeria’s average revenue earning in the wake of the crisis at about $114 per barrel, which translates to about $18.24 million (about N2.684 billion) daily.

Nigeria has already been reaping an average of $25.94 (N4, 200) as extra revenue from every barrel of crude oil exported since the beginning of the year, with average price at about $104.94 (N17, 000) per barrel, and budget benchmark for 2013 at $79 (N12, 800) per barrel.

The escalation of the Syria crisis following last week’s chemical weapon attack, shot barrel price of oil to an average of $112.92 (N18, 300) per barrel last Wednesday and about $116.34 (N18, 800) per barrel on Friday.

The crisis may well provide a veritable opportunity for Nigeria to recoup part of its losses from crude theft and vandalism.

The Federal Government says it has lost over 146 million barrels of crude oil estimated at about $11.794 billion (about N1.852 trillion) to theft, deliberate sabotage, and pipeline vandalism between 2009 and 2011, according to the latest audit report by the Nigerian Extractive Industries Transparency Initiative (NEITI), Nigeria stands to benefit from the rising price scenario.

U.S. threat to intervene in the crisis triggered panic in commodity markets in the Far East, with brokers expressing concerns about possible disruptions in the supply of oil to the industry in the Pacific region.

“In the event of a military operation in Syria, oil prices may rise further,” a market analyst representing the Bank of New York, Michael Whitner, said. “A possible attack on Syria will affect the region and the crisis may spread to neighboring countries, leading to disruptions in the supply of raw materials throughout the Middle East.”

– Bassey Udo, Premium Times

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