*As attacks on oil installations lead to 10% drop in May
12 June 2016, Sweetcrude, Abuja – Attacks by militants on oil installations cut Nigeria’s production by 10 percent in May and has resulted in the lowest output by the country in more than thirty years, a survey revealed.
According to a recent Bloomberg News survey, Nigerian crude production declined by 160,000 barrels a day to 1.45 million over the past month.
The Nigerian phenomenon has also contributed to a drop in monthly output from the Organization of Petroleum Exporting Countries (OPEC). OPEC’s total crude output fell to 32.71 million barrels a day last month, from a revised 32.83 million in April.
It noted that “Nigeria’s production has fallen to the lowest in almost three decades, helping to drive an 80 percent rally in oil prices since they touched a 12-year low in January. Brent, the global benchmark, is trading near $52 a barrel, the highest since October.”
The Nigerian National Petroleum Corporation disclosed last Thursday that it lost more than N19.43bn in the month of April, as the country’s crude oil production dropped from 59.27 million barrels recorded in February to 57.43 million barrels in March, due to growing acts of pipeline vandalisation in the Niger Delta region.
The corporation stated this in its Monthly Financial Report released in Abuja on Thursday where it also revealed that over 1,500 megawatts of electricity were lost as a result of the destruction of oil and gas facilities, adding that the capacity utilisation of the Warri
Refining and Petrochemical Company plummeted from 25.65 percent in March to 6.36 percent in April.
“The NNPC’s monthly financial and operations report indicate an operational loss of 19.43bn in April 2016 as against 18.89bn in the month of March 2016. The deficit increased by 2.83 per cent in the month of April 2016 due to a slight decline in revenue generation, which is attributed to the decrease in petroleum product sales by 7.11 per cent.
In the meantime, Nigeria’s crude oil export has continued to drop. It was estimated that a further 130,000 barrels per day are being lost as the Trans Niger Pipeline, TNP, operated by Shell Nigeria, reportedly shut down after a leak was discovered. At $50/barrel the country is losing $6.5million per day in revenue or $45.5million for the week.
A number of International Oil Companies in Nigeria have declared force majeure of crude oil export, while some have been forced to suspend or cut production as a result of the bombing of oil facilities in the Niger Delta.
At a time where every oil producing country is fighting to keep their market share especially after the re-entry of Iran into the global market, Nigeria is simply giving away its share of the market because it cannot protect its national interest.
Furthermore, the uncertainty over the country’s ability to deliver cargoes in the wake of renewed attacks on oil infrastructure by Niger delta militants, has seen refineries cancelling orders for Nigerian oil. So, on top of everything else, the price Nigeria commands for its oil has also been hit.