Nigeria’s crude oil revenue has continued to fall, according to the newly released Monthly Oil Market Report for September, which revealed that the country’s crude oil output fell to 900,000 barrels per day (b/d) last month.
According to the OPEC report, Nigeria’s crude oil production (as reported by direct sources) fell from 1 million barrels per day in July to 900,000 barrels per day in August.
This comes as the price of the country’s crude grade, Bonny Light, fell by 10% in a single month (July-August). Bonny Light, which sold for $117 per barrel in July, fell to $106 per barrel in August.
However, the country’s crude oil revenue increased significantly year on year, with the Bonny Light price increasing by 64% between 2021 and August 2022.
The price of Bonny Light in 2021, according to the report, was $67 per barrel. This will rise to $110 per barrel in August 2022.
Bonny Light is a Nigerian light-sweet crude oil grade. It is an important benchmark crude for all West African crude production, and it is usually $1+ higher than Brent, the international crude grade.
Nigeria’s crude oil production has been declining for several years, with the country last producing 1.4 million barrels per day in 2020.
Production gradually declined to 1.3mb/d at the start of 2021, and then to 1.2mb/d in the first quarter of this year.
Output fell to 1.1mb/d in the second quarter of this year, 1mb/d in July, and 900,000b/d last month.
Further investigation revealed that the country’s rig count decreased from 16 in 2019 to 10 in August 2022.
Akpan Ekpo, Professor of Economics and Public Policy at the University of Uyo in Akwa Ibom State, stated in an interview that despite crude oil accounting for 80% of total trade, Nigeria needed to diversify because oil revenue was no longer reliable.
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“Oil prices are volatile, and we need to find other ways to increase revenue,” he explained.
According to energy services firm Baker Hughes Co, the number of oil rigs in the United States increased by four to 763 in the previous week to September 16, the highest since August.
According to Baker Hughes, this brings the total rig count to 251, up 49 percent from this time last year.
OPEC has stated that demand for its crude in 2023 will remain unchanged from the previous MOMR at 29.8 mb/d, which is approximately 0.9 mb/d higher than in 2022.
Despite the ongoing increase in demand for OPEC crude, Nigeria’s low output puts its earnings at risk, as the country has been unable to fully benefit from the increase in demand.
Mele Kyari, Group Chief Executive Officer of Nigerian National Petroleum Corporation Limited, blamed the country’s low crude oil outputs on pipeline vandalism in the Niger Delta in an interview late last month.
According to him, 295 illegal connections were discovered around the pipeline, resulting in the shutdown of production.
Ayodele Oni, partner at Bloomfield Law Practice and lawyer advising NNPC Ltd on oil and gas projects and transactions, urged the Federal Government to find solutions to the country’s oil theft problems.