Nigeria In Trouble; Oil Exports Fall To Lowest In 4 Years

Nigeria’s oil exports will fall to a  four-year low as a result of crude oil theft and resultant facility closures by some oil companies, news agency Reuters is reporting.

Quoting the shipping lists it saw Tuesday, the agency says Nigeria will now export 1.76 million barrels per day, the lowest since August 2009.

Analysts say the new figure has taken the country back to the export levels last seen during the height of militancy in the Niger Delta.

They say the development is even more significant on the national financing gap, which implies there will be more drawings on reserves for augmentation.

“This is not good especially when we have an impending battle to manage the FPI (Foreign Portfolio Investment) flows later this year,” an expert with one of Nigeria’s biggest banks told PREMIUM TIMES Wednesday morning.

In its own report, Reuters quoted Rolake Akinkugbe, head of energy research at the pan-African Ecobank Group as saying “the lower figure could further dent Nigeria’s reputation as a reliable exporter, and could prompt buyers to seek alternative suppliers.”

“It further puts into question their competitive position, as it gives the impression that there is no security of supply, so buyers could look to other markets where they see supply as more stable,” Ms Akinkugbe was quoted as saying.

The Goodluck Jonathan administration has paid several billions of naira to former Niger Delta militants to guard oil installations and block oil theft.

But if anything, the situation has worsened.

On April 1, Italian oil firm, Eni, shut down its activities in the swampy oil fields of Bayelsa State over theft.

The firm attributed the frequent spills to oil theft by vandals and said it had decided to shut down operations to prevent further damages to the environment.

Eni, which operates in Nigeria as Nigeria Agip Oil Company (NAOC), said it authorised the suspension of operations on March 22 and subsequently declared force majeure on its oil output from the facility on March 23.

Force majeure is a legal notice that absolves an oil firm of liabilities for failure to meet supply obligations to crude buyers due to circumstances beyond the firm’s control.

ENI lamented that 7,000 barrels of the about 40,000 barrels of crude oil it produced from the facilities was lost to oil thieves, a development the firm described as unsustainable.

Royal Dutch Shell had also last month declared a force majeure on the Bonny Light grade of crude oil, closing the 150,000 barrel per day (bpd) Nembe pipeline for six weeks.

Shell shut the facilities after lamenting about what it described as the increasing oil theft from its pipeline, saying it was losing about 60,000 barrels of crude daily to oil thieves.

Yet, the Joint Task Force in the Niger Delta said its activities have reduced crude theft in the region.

Nigeria is estimated to lose about $6 billion annually to crude theft and the development appears set to severely hurt the economy.

Already, the country’s revenue profile has dropped drastically.

On April 18, the Nigeria National Petroleum Corporation, NNPC,  reported a drop in crude oil production in the first quarter of 2013, January to March, which caused Nigeria a loss of crude oil revenue to the tune of $1.23 billion (N190 billion),

The corporation attributed the drop  in revenue to the incessant theft of Nigeria’s crude oil and vandalism along the major pipelines within the Niger Delta.

To lose another N83 billion in May/June

The NNPC also indicated that it discovered 53 break points along the 97km Nembe Creek Trunkline, and that repair work would last about six weeks.

“This will further reduce our April and May monthly average to about 2.2mbpd and further decrease crude oil revenue by about 554 million dollars (N83 billion) that should have accrued to the Federation Account,” the corporation said.