Significant Revenue Loss
Nigeria loses approximately N636.3bn due to a continuous decline in monthly oil outputs since January 2024. Data obtained from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that Nigeria’s oil production, excluding condensates, dropped from 1.43 million barrels per day (mbpd) in January to 1.25mbpd in May.
Decline in Oil Production
The figures show that the total volume of crude produced in January was 44.22 million barrels, which plummeted to 38.8 million barrels in May. This decline of 5.43 million barrels between January and May is significant. During this period, the price of Brent crude oil increased marginally from $80.12 per barrel in January to $81.75 in May, and the average exchange rate of the naira against the US dollar was N1,434.1/$ in May.
Factors Contributing to Decline
Several factors have contributed to the plunge in oil production. The repeated vandalism of oil pipelines and crude oil theft have been primary reasons. Despite ongoing efforts to curb these issues, they have not been as successful as anticipated. This situation has resulted in a substantial drop in the country’s oil production over the months.
NNPC’s Call to Action
On June 13, 2024, the Nigerian National Petroleum Company Limited (NNPC) urged the judiciary to establish a special court to prosecute individuals involved in oil theft and pipeline vandalism. NNPC’s Group Chief Executive Officer, Mele Kyari, emphasised the need for expedited hearings on such offences during the National Judges Capacity Building Workshop on the Petroleum Industry Act 2021.
Judiciary’s Role in Addressing Theft
Kyari highlighted the crucial role of the judiciary in addressing these challenges. He called for accelerated hearings and the creation of a special court to handle cases related to crude oil theft and pipeline vandalism. These measures, he asserted, are essential for the oil and gas industry to realise its full potential and contribute significantly to national economic and industrial growth.
Impact on Refineries and Revenue
Crude oil theft has severely impacted refinery operations in Nigeria, limiting both government revenue from oil exports and the earnings of international oil companies. Major oil companies have reported difficulties in meeting their daily quotas due to theft and vandalism. This challenge also affects modular refineries and the supply of crude oil.
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