Nigeria’s crude oil revenue declines considerately as a result of persistent oil pipelines vandalism and crude oil theft
| By Anayo Ezugwu | Nov. 11, 2013 @ 01:00 GMT
THE oil revenue accruable to the federal government from crude oil exports is at its lowest ebb. The oil revenue dropped by N188.5 billion to N457.2 billion in August 2013, compared to N645.7 billion recorded in July. The Central Bank of Nigeria, CBN, in its economic report for August 2013, said the amount received by the government from crude oil sales in August, is the lowest since the beginning of the year.
According to the CBN, the crude oil revenue in January 2013 stood at N591.4 billion, rising to N647.6 billion in February, before dropping to N595.3 billion in March. The figures rose again in April to N613.4 billion; N641 billion in May, and dropping again to N559.4 in June. It rose again in July to N645.7 billion, before its lowest drop to N457.2 billion in August.
A close look at the CBN report on gross revenues in August 2013 reveals that the federal government received N129 billion, from sales of crude oil and gas, which dropped by N44.1 billion from N173.1 billion recorded in July. Revenue accruable to the federal government from domestic oil and gas sales stood at N109.3 billion, dropping by N4.5 billion from N113.8 billion in the preceding month, while petroleum profit tax/royalties dropped by N140 billion, from N358.6 billion recorded in July to N218.6 billion as at August. The CBN attributed the decline in crude oil revenue relative to the preceding month to the shortfall in receipts from exports and other oil revenues during the period in review.
The CBN noted that Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.88 million barrels per day or 58.28 million barrels for the month. It stated that this was 0.03 million barrels per day or 1.6 percent higher than the 1.85 million barrels per day or 57.35 million barrels produced in the preceding month.
The improvement, the CBN noted, was due to the successful arrests and constant clampdown of pipelines vandals, adding, however, that crude oil theft in the Niger Delta region continued to impact negatively on oil output. The CBN report further stated that oil export was estimated at 1.43 million barrels per day or 44.33 million barrels, representing an increase of 2.1 percent, compared with 1.40 million barrels per day or 43.4 million barrels recorded in the preceding month. It said deliveries to the refineries for domestic consumption stood at 0.45 million barrels day or 13.95 million barrels during the review month.
The International Monetary Fund, IMF, in its world economic outlook for October 2013, said Nigeria’s economy and those of other countries without sufficient buffers would be negatively affected by a sharp or protracted decline in oil and commodity prices. The IMF further stated that the decline would likely affect planned or ongoing resource development projects in the country.
Meanwhile, Diezani Alison-Madueke, minister of petroleum resources, said that the incidence of crude oil theft and its global support system represents another face of terrorism in the country. She said that the development remained a clog in the wheel of the nation’s high economic growth trajectory. Alison-Madueke, who stated this in London recently while delivering a keynote address at the Power List 2014, explained that the ugly incident of crude oil theft has continued to thwart efforts on sustained economic growth because the effect of the crude oil theft scourge reverberates across the entire spectrum of the Nigerian economy. “The grave phenomenon of oil theft and its global support system represents another face of terrorism counteracting our efforts at sustaining the trajectory of our high-growth economy, the stability of our society, and the enhancement and wellbeing of our people,” Alison-Madueke said.
She noted that efforts at combating the menace locally were made more complicated because of the international slant to the crime. “Theft of this magnitude is not only highly technical, but it is also an international-level crime. It is aided and abetted by syndicates outside of Africa who are the patrons and merchant-partners of the oil thieves. This crime against Nigeria must be resisted, as we simultaneously deploy in-country resources to fight this menace.”
The minister therefore, called on the global community to advocate strongly against crude oil theft. “It perpetuates criminality, defrauds economies and discourages investment. This is a crime that threatens not only Nigeria’s oil and gas sector, but also threatens the security of the Gulf of Guinea, and by extension, threatens the global economic order,” she argued.
Despite the scourge of crude theft, Alison-Madueke enthused that the Nigerian oil and gas industry has been placed on the path of growth and irreversible progress engendered by the transformation footprints of the President Goodluck Jonathan administration. “The Nigerian Content Act, signed into law in 2010 by President Jonathan, vigorously advocates for indigenous participation, job creation and in-country capacity development and has nurtured leading edge indigenous companies capable of competing with the traditional multinationals. The very topical Petroleum Industry Bill, PIB, is a historic piece of legislation designed to effect extensive and much needed legal, regulatory, financial and environmental reform to Nigeria’s oil and gas industry,” she said.
Andrew Yakubu, group managing director, Nigerian National Petroleum Corporation, NNPC, is also worried over the decline in revenue as a result of persistent attacks on major pipeline arteries supplying crude oil to export terminals. He admitted that the menace of crude oil theft has impacted negatively on the nation’s economy.
Yakubu made this known during his submission to the National Assembly joint committee on the Medium Term Expenditure Framework, MTEF, for 2014 to 2016. “The critical and most important point to note here is that when the artery conveying crude oil to the terminals is hit, this reduces our production volume by 150,000 barrels per day and for the period that the line is down and that accounts for the drop in crude oil production. From February to date, we have witnessed so many breaches and each time we go down about 150,000 barrels per day goes down,” Yakubu said.