A Review of the Nigerian Energy Industry

Nigeria loses N232bn, as crude export to US declines

Crude-oil-vesselIke Amos

12 April 2014, Sweetcrude, Lagos –
The increase in crude oil production in the United States of America, USA, and shale oil exploration in the country has started having a negative impact on Nigeria’s crude earnings, as Nigeria lost $1.452 billion, about N232.32 billion, in one year due to decline in crude export to the United States.

According to the December 2013 Petroleum Information, released by the Nigerian National Petroleum Corporation’s, NNPC, Nigeria’s crude export to the US dropped to 1.438 million barrels as at December 2013, from 14.279 million barrels recorded in the same period in 2012.

Using an average crude price of US$113.11 per barrel, this translates to crude export of $1.615 billion (N258.4 billion) in December 2012 and $162.65 million (N26.024 billion) as at the end of December 2013, representing a loss of N1.452 billion, about N232.32 billion within a one year period.

India, according to the report, has, therefore, overtook the US as the highest importer of Nigeria’s crude, as the US which accounted for 19.15 per cent of Nigeria’s total crude export and 86.28 per cent of total crude export to North America as at the end of December 2012, dropped to the 10th highest importer of Nigeria’s crude, with 1.438 million barrels as at end December 2013.

India emerged the highest recipient of Nigeria’s crude export for the month of December 2013, with 13.086 million barrels, followed by the Netherlands, with 9.866 million barrels and France, with 4.497 million barrels.
Nigeria exported 4.869 million barrels of crude to Brazil in the period under review; Spain got 4.6 million barrels, while 3.895 million barrels of crude oil was exported to South Africa.
Others are Cote D’Ivoire — 1.898 million barrels; Thailand — 1.897 million barrels and Australia — 1.862 million barrels.

The report further noted that by December 2013, Europe was the highest importer of Nigeria’s crude, accounting for 47 per cent of Nigeria’s total export; followed by Asia and Far East, accounting for 26 per cent; while Africa accounted for 12 per cent of Nigeria’s crude export.
South America accounted for 10 per cent of Nigeria’s total crude export, while Oceania/Pacific and North America accounted for three per cent and two per cent respectively.

Generally, Nigeria’s total crude export declined by 13.45 per cent, between December 2012 and December 2013, leading to a loss of $1.134 billion, about N181.44 billion.

Specifically the country recorded total crude export of 64.537 million barrels in December 2013, down by 10.03 million barrels from 74.564 million barrels recorded at the end of 2012.

As a result, the country earned $7.299 billion, about N1.168 trillion from crude export as at December 2013, down by $1.134 billion (N181.44 billion) from $8.434 billion, about N1.349 trillion recorded December 2012.

KPMG Professional Services had in February warned that the discovery and exploration of shale oil and gas across the globe will put Nigeria’s economy at serious risk, unless the country is able to churn out policies that will bring about increased investment in the oil and gas sector and ensure stable power supply.
According to KPMG, Nigeria’s ability to finance its budget will be greatly threatened, unless it puts in place measures that will grow its crude production capacity, diversify the economy, as well as build additional crude oil refineries, saying that these will significantly reduce the effect of Shale oil discovery on the country’s revenue.
“Shale oil discovery has created a lot of opportunities for international oil companies, IOCs, and has brought about stiff competition among crude oil producing countries, noting also that oil producing countries will soon be in fierce competition with themselves to attract investments and market their crude,” it said.

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