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Oil output drops as price stagnates

By Udeme Akpan

There are indications that threat to Nigeria’s N8.83 trillion 2019 budget is increasing from the oil revenue estimates  as current reports show a decline in oil production level amidst price stagnation.

Oil
Oil

The Federal Government had benchmarked its 2019 budget on $60.00 and 2.3 million bpd, including Condensate.

But in its latest report obtained by Vanguard yesterday, the Ministry of Petroleum Resources, disclosed that the nation’s output dropped from 2,081,936 barrels per day (bpd) recorded in December, 2018 to 1,999,292 bpd in January, 2019, indicating a drop of 82,644 bpd.

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Although the report did not disclose specific reasons for the development, Vanguard’s investigation showed that it was fuelled by vandalism and oil theft.

For instance, a report obtained from Shell Petroleum Development Company Limited; Nigeria’s largest producer, output experienced six cases of oil spill in January 2019 alone.

Specifically, it stated that an attack which culminated in oil spill occurred at Imo River2 – Ogale Pipeline at Isi-Etitiuzo_Owaza, Diebucreek-Nunriver Pipeline at Oporoma, Oguta -Egbema Pipeline at Umunkwu-Oguta, Nunriver – Kolocreek Pipeline at Aguobiri, Okordia – Rumuekpe Pipeline at Ula-Ikata and  Nkpoku – Bomu Pipeline at Egbalor on January 2, 3, 7, 8,9 and 21, 2019 respectively.

It stated: “Oil spills due to crude oil theft and sabotage of facilities (referred to as third party interference), as well as illegal refining, cause the most environmental damage from oil and gas operations in the Niger Delta.”

The situation is said to be worsened by relatively low oil price in the international market.

The prices of Brent, West Texas Intermediate, WTI and OPEC Basket stood at $61.30, $51.74 and $61.37 per barrel respectively yesterday. The Federal Government is expecting the price to rally at around $70 per barrel to give the $60 benchmark a relative comfort.

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But close market watchers said the little gains associated with oil price would amount to nothing because of limited output.

While presenting his 2019 budget to the National Assembly, President Muhammadu Buhari had stated: “Notwithstanding the recent softening in international oil prices, the considered view of most reputable analysts is that the downward trend in oil prices in recent months is not necessarily reflective of the outlook for 2019.

“However, as a responsible Administration, we will continue to monitor the situation and will respond to any changes in the international oil price outlook for 2019. With regard to oil production, I have directed the NPPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day.”

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