The Organization of the Petroleum Exporting Countries’ recently issued Monthly Oil Market Report for September indicated that Nigeria’s crude oil output dropped to 900,000 barrels per day (b/d) in September. As a result, the country’s crude oil revenues have continued to decline.
According to statistics provided by direct sources, Nigeria’s crude oil output decreased from 1 million barrels per day in July to 900,000 barrels per day in August, according to the OPEC report.
In addition, the price of the nation’s premium oil, Bonny Light, fell by 10% in a single month (July-August).
Bonny Light’s price, which was $117 per b at the time of sale, fell to $106 per b in August.
However, when the price of Bonny Light increased by 64 per cent between 2021 and August 2022, the nation’s earnings from crude oil increased dramatically year over year. According to the report, the price of Bonny Light as of 2021 was $67 per barrel. However, this increased to $110 per barrel in August 2022.
Bonny Light is a light-sweet crude oil grade produced in Nigeria. It is an important benchmark crude for all West African crude production, and usually $1+ higher than the international crude grade, Brent.
Nigeria’s crude oil production has been witnessing significant drops for some years now, as the country last recorded a 1.4mb/d in 2020.
Production gradually crashed further to 1.3mb/d at the beginning of 2021, and further to 1.2mb/d in the first quarter of this year. As of the second quarter of this year, output dropped to 1.1mb/d, to 1mb/d in July, and 900, 000b/d last month. Further checks revealed the country’s rig count went from 16 recorded in 2019 to 10 in August 2022.
This is the U.S oil rig count rose by four to 763 in the preceding week to Sept. 16, its highest since August, according to energy services firm Baker Hughes Co said. Baker Hughes said that put the total rig count up to 251, or 49 per cent over this time last year.
OPEC has said demand for its crude in 2023 remained unchanged from the previous MOMR to stand at 29.8 mb/d, which is around 0.9 mb/d higher than in 2022.
Nigeria’s low output puts its profitability at danger since the nation hasn’t been able to fully capitalize on the increase in demand for OPEC crude despite the demand for the commodity continuing to climb.
In a late-month interview, the Group Chief Executive Officer of Nigerian National Petroleum Corporation Limited, Mele Kyari, attributed the nation’s poor crude oil production on theft brought on by pipeline vandalism in the Niger Delta. He said that 295 illicit connections had been discovered near the pipeline, which caused the output to stop.
Ayodele Oni, a partner at Bloomfield Law Practice and an attorney who advises NNPC Ltd on oil and gas projects and transactions, urged the Federal Government to address the problems with oil theft plaguing the industry.
