Out of the 1.772 million barrels per day crude oil allocated to the
country by the Organisation of Petroleum Exporting Countries (OPEC) in
June, Nigeria was only able to produce 1.158 million bpd, the latest
Monthly Oil Market Report (MOMR) by the organisation has indicated.
At a conservative average price of $110 per barrel for the month, a
THISDAY analysis showed that Nigeria’s daily underperformance pegged
against the OPEC quota yielded a whopping 614,000 bpd and 19.034
million barrels’ deficit for the month.
A further breakdown revealed that valued against the daily oil price
for the period, Nigeria may have lost as much as $2,093,740,000 due to
its inability to, for months, increase the country’s production level.
For a country with huge foreign exchange shortages, if the loss had
been plugged it would have for a start helped cash-strapped federating
units (states and local governments) embark on major projects.
The Nigerian National Petroleum Company Limited (NNPC) has not been
able to contribute a kobo to the federation account this year.
Although, month-on-month, the country’s oil production increased by
about 134,000 barrels per day, from 1.02 million bpd recorded in May
2022, to the new figure of 1.158 million bpd, according to data by the
government, OPEC’s figures showed that it was far from the projection
for the period. It was also markedly lower than the production for
April, which stood at 1.219 million bpd.
It also almost aligned with data for June released by the Nigerian
Upstream Petroleum Regulatory Commission (NUPRC) which stated that the
country produced more than 133,000 bpd, representing a 0.13 percent
increase from the May 2022 output.
But despite the huge gap between expected and actual production, the
Minister of State, Petroleum, Mr Timipre Sylva, had recently said the
gap will be filled by August.
Sylva’s comment came almost a year after similar assurances by the
minister and the Group Managing Director of the Nigerian National
Petroleum Company (NNPC), Mallam Mele Kyari, that the country will
drill enough oil to cover for the deficit by December 2021.
“For us in Nigeria, we are at a low point. We are not able to meet our
OPEC quota. We have given ourselves just about a month to ensure that
we can … we believe that by August we would see some improvement in
security,” Sylva said in an interview.
But the aspiration expressed by the minister remained very ambitious
as Nigeria’s production increases remain very uninspiring, slipping to
a record low of 1.024 million bpd production in May.
The gap is expected to continue to grow since there appears to be no
short term solution to the problem and Nigeria’s OPEC quota has even
increased to 1.826 million bpd for the month of August.
Identifying massive theft as one of the reasons for its inability to
meet its quota, the federal government had months ago, deployed heavy
military presence in the Niger Delta to curb the menace. But even that
move has not helped much.
However, it would appear that there’s no shortcut to nipping the
prolonged underperformance in the bud, with dipping investment,
multiple divestments, operational difficulties and oil theft having
been identified as issues bedeviling the sector.
In addition, the country is currently experiencing petrol scarcity due
to its inability to refine its fuels in-country, posing a huge blow to
the local currency and the economy by extension.
On the economy, the OPEC report stated that despite the improvement in
fossil fuel prices, the short-term economic outlook for Nigeria was
clouded by high inflation, which it said had reduced private sector
optimism and weakened consumer spending.
“In May 2022, the composite CPI rose to 17.7 per cent y-o-y from 16.8
per cent y-o-y in the prior month.
“In response to the elevated inflationary pressures, the Central Bank
of Nigeria (CBN) raised its policy rate by 150 bps to 13 per cent,
bringing borrowing costs to the highest since April of 2020.
“It was the biggest rate hike since July of 2016 amid concerns that
persistent inflationary pressures could weigh on the country’s fragile
recovery…pointing to the weakest improvement in business conditions in
Nigeria’s private sector since January of 2021.
“Overall, the above-average fossil fuel prices support a firmly
positive outlook for the rest of the year, but concerns over soaring
inflation would increase uncertainty next year,” the OPEC report
stressed.
Tied to the country’s under-production, last week, the NUPRC Chief
Executive, Mr Gbenga Komolafe, revealed that Nigeria lost $1 billion
in revenue during the first quarter of this year due to crude oil
theft, warning that the development was a threat to the economy of
Africa’s top producer.
Komolafe noted that of the 141 million barrels of oil produced in the
first quarter of 2022, only about 132 million barrels of oil were
received at export terminals.
Fuel price halts at N200/litre, high fares linger
Motorists and commuters in Lagos and Ogun states on Tuesday again,
lamented the biting consequences of the lingering fuel scarcity as the
situation remained unchanged from the trends experienced over the past
two weeks.
Checks by our correspondents showed that the price of Premium Motor
Spirit, commonly referred to as petrol, seemed to have stalled at
N200/litre, about the same price the product has been selling in
Lagos, Abuja and some states over the past week.
It was also observed that a number of filling stations in Lagos
remained closed for business, ostensibly due to the unavailability of
the product.
Also, the few outlets dispensing the product in the cities had long
queues as motorists jostled to buy the product.
Further checks by The PUNCH also showed that transport fares across
various parts of Lagos maintained a 50 per cent hike due to the
continued scarcity of PMS. Some routes witnessed hikes as high as 100
per cent.
A commercial transport operator who plies the Berger/Mowe route
between Lagos and Ogun states said motorists were grappling with not
only a significant increase in fuel price, but also great difficulty
in accessing the product.
He said, “It’s because of the price which we are buying. For more than
a week, we’ve been buying fuel for N200/litre or almost N200/litre.
Apart from the increase in price, we often suffer before we can buy.
Many filling stations have closed for business. They refuse to sell
even though we know some of them to have fuel. Every day, I spend
hours before buying fuel.“
Passengers think we enjoy increasing our fares, but if we don’t
increase, we won’t make any profit. Even with the increase, we are
still not making what we make on a normal day, especially because of
the time it takes to buy fuel.”
A passenger who identified herself as Ganiyat said the increase in the
fares along the Berger/Ibafo axis was beginning to take a toll on the
commuters.
According to her, the fuel scarcity had led to a scarcity of
commercial buses, a situation which conventionally forces transport
fares to go up.
She said, “It is getting out of hand. I go from Ibafo to Lagos and
back every day. Normally, I pay N200 from Berger to Ibafo, but ever
since this fuel scarcity started, you have to make sure you come out
with enough money because you don’t even know how much they are going
to charge. Today, they are charging N500. On Saturday I paid N800 for
a trip I normally pay N200.”
Mr Cyril Ukpor, who resides at Iyana Ejigbo area of Lagos State,
however said he bought fuel at N165/litre at one of the outlets of the
Nigerian National Petroleum Corporation in the area.
Also, a resident who gave her name as Blessing said she bought the
product at N200/litre.
“I have been buying fuel for N200/litre. To me it is not really about
the price, it is about the availability of the product. Let the
product be readily available for us to buy. We know that whenever we
start seeing long queues like this, it is an indication that they want
to increase the pump price”