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Nigeria Loses 28m Barrels of Crude Oil In 6 Months

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Nigeria lost over 28 million barrels of crude oil between January and July 2022 which reduced the Federal Government’s oil and gas revenue target.

The Federal Government, through the 2023-2035 Medium Term Expenditure Framework and Fiscal Strategy Paper, recently presented by the Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, argued that the shortfall in oil production was due to pipeline vandalism, crude oil theft, and high petrol subsidy.

Industry experts also attributed the decline to oil theft, which appears to have defied solutions.

In January 2022, Nigeria recorded high crude oil production figure of 1.399 million barrels per day before crashing to as low as 1.084mbpd in July, as about 315,000 barrels of crude oil daily, amounting to 28.4 million barrels of oil during the six months interval.

According to monthly oil production reports of the OPEC indicated that Nigeria actually stepped up its output from 1.197mbpd produced in December 2021 to 1.399mbpd in January 2022.In February, it dropped to 1.258mbpd and crashed further in March to 1.238mbpd with further plunging to 1.219mbpd and 1.024mbpd in April and May.

The country’s oil production moved up marginally in June, rising to 1.158mbpd, but this was short-lived, as it eventually dropped to 1.084mbpd in July.

OPEC data further showed Nigeria’s quarterly oil production moved up from 1.26mbpd in the fourth quarter of 2021 to 1.299mbpd in the first quarter of 2022 while it dropped to 1.133mbpd in the second quarter of 2022.

The Group Chief Executive Officer, Nigerian National Petroleum Company Limited, Mele Kyari, said that the NNPC was partnering with security agencies and other stakeholders to tackle the menace.

The NNPC boss also cautioned refineries outside Nigeria that patronised dealers of stolen crude oil, insisting that the commodity was not refined in Nigeria due to the non-functional refineries across the country.

Consequently, the FG failed to hit its oil and gas revenue target of N3.12tn for the first four months of the year with attaining only a 39 per cent performance of mere N1.23tn.

According to the document presented by the Minister of Finance, Budget and National Planning, the government projected N9.37tn oil and gas revenue in 2022.

“The gross oil and gas federation revenue for the full year 2022 was projected at N9.37tn; as of April 30, 2022, N1.23tn was realised out of the projection of N3.12tn, representing a mere 39 per cent performance,” the document read in part.

In the document, the government blamed the poor performance despite higher oil prices on oil production shut-ins due to pipeline vandalism, crude oil theft, and high petrol subsidy cost.

Although it also failed to meet its target, the non-oil had an average performance of 92.6 per cent as the government planned to up taxes in 2022.

The finance minister also said the government was planning to address revenue leakages by concluding the service-wide implementation of IPPIS, eliminating regressive subsidies on petrol prices and electricity tariffs, as well as enforcing a cost-to-income ratio cap for government-owned enterprises.

It was disclosed that the cost of fuel subsidy was estimated to increase by 369.93 per cent from 2021 to 2023.

The finance minister said that the FG had projected to spend N6.72tn on petrol subsidy payments in 2023.

It appears that the failure was, however, driving the government towards accumulating more debts and introducing more taxes.

A political economist and former presidential candidate, Prof. Pat Utomi, said the constant decline in oil production would hamper the government from meeting its revenue target this year, cautioning that “government may fail to pay salaries, which would have adverse effects on Nigerians.”

He also warned against increasing taxes, which he said would negatively affect production and create a vicious business environment.

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