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Despite Rising Population, Increasing Govt. Spending, Nigeria Producing Less Oil Than 25 Years Ago - THISDAY

JANUARY 18, 2022

BY  Emmanuel Addeh

Nigeria is producing far less oil than it did 25 years ago when the estimated population was much less than what it is today and government spending was far below what it is in 2022, a THISDAY’s analysis has revealed.

A comparison of the country’s average oil production per day in 1997, as indicated in the Nigerian National Petroleum Corporation (NNPC) yearly statistical bulletin, showed that while Nigeria pumped 2.344 million barrels per day, plus condensates over two and a half decades ago, it can hardly produce 1.4 million as of this year.

This could however rise to 1.7 million barrels per day if the current condensate production of about 300,000 barrels to 400,000 barrels are added to the between 1.3 million to 1.4 bpd currently being pumped.

Furthermore, while 26 rigs were in operation, on both onshore and offshore terrains, in 1997, Nigeria at present has about 12 active oil rigs, with about half of them not in use.

Nigeria has been struggling for months with meeting the quota allocated to it by the Organisation of Petroleum Exporting Countries (OPEC) due to ageing infrastructure as a result of years of under-investment in the upstream of the oil and gas sector.

Added to these are vandalism and sabotage, technical issues as well as difficulties with restarting oil wells the country shut down last year in the heat of the Covid-19 pandemic.

Nigeria’s prospects remain clouded, with deteriorating infrastructure that have seen all of its key export grades, including Abami, Bonny Light, Forcados and Qua Iboe face severe production issues throughout the last year.

According to the 1997 statistical bulletin obtained by THISDAY, a total of 155 wells were spudded while total crude oil production, including condensates, stood at 855.736 million barrels in 1997.

In addition, total revenue generated into the Federation Account amounted to $12.198 billion, out of which Petroleum Profit Tax (PPT) contribution was $3.014 billion, royalties about $1.453 billion, while equity oil sales accounted for about $7.527 billion.

To put it in context, with a paltry N10.54 billion in November, the NNPC Limited, was only able to remit 8.5 per cent of its projected N122.7 billion to the federation account, a joint pool of funds shared by the country’s three tiers of government. However, this excludes royalties and taxes which are other ways government makes money from the oil sector.

In April, last year, the national oil company paid in nothing into the federation account, even as the N10.5 billion represented a 29.1 per cent decline of the monthly contribution which has steadily declined in the past months due to a variety of factors, including under-production and petrol subsidy payments. In addition, while a total of N2.30 trillion was supposed to have been paid to the federal, state and local governments in the first 11 months of 2021, only N522.2 billion had been paid as of November 2021, resulting in a shortfall of N1.78 trillion.

But the 1997 bulletin further showed that crude oil suppliers to the three local refineries at the time, amounted to about 80.473 million barrels while 78 million barrels were processed and total petroleum products produced by the refineries were put at about 9.37 million metric tonnes (86.714 million barrels). In contrast, Nigeria imports all of the products it consumes today, since all the refineries have become inoperable due to years of lack of maintenance.

The oil statistics showed that total crude oil exports stood at 767.9 million barrels averaging 2.104 million barrels per day in 1997, of which the federation (NNPC) equity oil export stood at 392.3 million barrels.

But as opposed to 155 wells in 1997, a total of 81 wells were drilled in 2020, of which 76 were development wells and five were exploratory wells.

Furthermore, crude and condensate production for 2020 was 644,362,369 barrels giving a daily average of 1.76 bpd, in contrast to the 855.7 million barrels pumped 25 years ago.

On the country’s refining capacity, the NNPC statistical bulletin for last year stated: “All process units were on shutdown thus, they processed 0.00 barrels, (0.00mt) of various petroleum products.

“The total product output of LPG, PMS, HHK, AGO and fuel oil by the refineries was 0.00 metric tons. The combined average refining capacity utilisation for year 2020 was 0.00 per cent.”

Whereas some measure of export was carried out 25 years ago, in 2020, Nigeria imported major petroleum products amounting to 15.1 million metric tonnes.

Moreover, estimated average daily consumption for 2020 was 60 million litres of petrol , 14.1 litres of diesel and 740, 000 litres of household kerosene.

According to the 2020 bulletin, the latest in the series, the NNPC stated that a total of 451 line breaks were reported on its pipelines out of which 349 were as a result of vandalism, while 102 cases were due to system deterioration like rupture and weld failure.

On a positive note, however, while natural gas produced in association with oil amounted to 1,142 billion standard cubic feet of which 801.8 Bscf (70.21 per cent) was flared 25 years ago, today, less than 10 per cent of the country’s gas is flared.


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