Nigeria’s earnings from crude oil plunged by about N75.9bn in February and March this year despite the increase in global oil prices for the third consecutive month in March 2022.
The latest data from the April 2022 Monthly Oil Market Report of the Organisation of Petroleum Exporting Countries showed that while oil prices had been on the increase since January this year, Nigeria’s production had been on the decrease.
In its oil market highlights on crude oil price movements, the organisation said, “Crude oil spot prices rose for the third-consecutive month in March. The North Sea Dated benchmark gained more than $20/barrel on a monthly average and WTI gained almost $17/barrel, on the back of escalating geopolitical tensions in Eastern Europe and concerns this might result in large oil supply shortages, amid trade dislocations.
“The OPEC Reference Basket price increased $19.53, or 20.8 per cent, to settle at $113.48/barrel. Oil futures prices witnessed elevated volatility due to the uncertain short-term oil supply and demand outlook. The ICE Brent front-month rose $18.36, or 19.5 per cent, to average $112.46/barrel and NYMEX WTI gained $16.63, or 18.1 per cent, to average $108.26/barrel.”
However, despite the rise in global crude oil prices, Nigeria’s earnings from the sale of the commodity had been dropping due to the monthly plunge in its oil production.
The report showed that the country’s oil production had been falling since January this year, for instance, while the country produced 1.413 million barrels of crude oil daily in January, this dropped to 1.378 million barrels per day in February.
This indicates a daily plunge of 35,000 barrels and translates to a total loss of 980,000 barrels of crude oil in February 2022.
The country’s crude oil production crashed further by 744,000 barrels in March 2022 when compared to what the country produced in the preceding month of February.
An analysis of the OPEC document showed that Nigeria’s oil production dropped from the 1.378 million barrels per day recorded in February 2022 to 1.354 million barrels per day in March, indicating a daily plunge of 24,000 barrels of crude oil.
This implies that for the 31 days in March, the country’s oil production dropped by a total of 744,000 barrels, despite the rise in global oil prices.
The average prices of Brent crude, the global benchmark for oil, in February and March 2022 were $97.13/barrel and $117.25/barrel, according to data from the global statistical firm, Statistica.
The official exchange rate of the Central Bank of Nigeria during the two-month period under review was put at N416 to the dollar.
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Therefore by losing 980,000 barrels of crude in February, Nigeria’s oil earnings dropped by N39.6bn in that month.
It also plunged further by N36.3bn in March due to the loss of 744,000 barrels of crude in the month of March.
This implies that the country’s oil earnings during the two-month period dropped by N75.9bn amidst the rise in global crude oil prices and the financial challenges confronting Nigeria as a nation.
The situation confirmed concerns by both government officials and International Oil Companies operating in Nigeria that crude oil production in the country had been on the decline since 2021.
This, they said, was due to the massive oil theft that had bedeviled the sector since January 2021 till date, though they noted that efforts were ongoing to address the issue.
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