Oil Market: Global demand to grow by 6 mb/d in 2021 ― OPEC

By Udeme Akpan

THE Organisation of Petroleum Exporting Countries, OPEC, Monday, disclosed that Nigeria produced 315,000 bpd, indicating a drop of 20.27 per cent below its new 1.554 million barrels per day, mb/d quota, excluding Condensate in August 2021.

The organization had granted the new quota to Nigeria in line with its moves to gradually return to a relatively higher level of production, which was cut to achieve market stability because of the outbreak of the Coronavirus pandemic.

But in its August 2021 Monthly Oil Market Report, MOMR, obtained by Vanguard, OPEC disclosed that the nation’s output dropped by 85,000 bpd to 1.239 mb/d in August 2021 from 1.323 mb/d in July, excluding Condensate, according to data obtained from direct sources.

However, when data obtained from secondary sources were considered, OPEC maintained that the nation’s output slipped by 114,000 bpd to 1.271 mb/d in August from 1.385 mb/d recorded in July 2021.

Although OPEC did not disclose the reasons for the drop in production, but Vanguard’s investigation, showed that it has much to do with increased vandalism, oil theft and illegal refining in the Niger Delta.

In any case, the development would not impact negatively on the nation’s N13.6 trillion 2021 budget, which was benchmarked on $57 per barrel and 1.8 mb/d, including Condensate that Nigeria has the capacity to produce between 300,000 – 400,000 bpd.

Already, the Federal Government has been urged to install multi-phased flow meters in all wellheads onshore and offshore Nigeria in order to reduce or completely eliminate oil theft.

This was one of the recommendations made at the end of the Civil Society Legislative Advocacy Centre(CISLAC)/Transparency International Nigeria (TI-N) one-day workshop within the framework of the project tagged, “Promoting sustainable reforms in the Nigerian Extractives sector”, with support from OXFAM, held recently in Lagos.

In a communique obtained by Vanguard, the participants called for the installation of modern meters at all transfer points in the industry.

Specifically, it stated: “Multi-phased flow meters with remote monitoring and control systems should be installed in all wellheads onshore and offshore Nigeria.

“Modern check meters should be installed upstream of all fiscal meters at custody transfer points in the hydrocarbon flow in the oil and gas industry in Nigeria. Implementation of Contract Transparency and similar commitment on Beneficial Ownership should be enforced.

“NNPC should cease reliance on Joint Venture (JV) partners’ determination of production cost. NNPC should provide better clarification and justification for first-line deductions.

“Weights and Measures Department, presently under the Ministry of Trade and Investment, should be upgraded to a Commission to adequately perform its statutory functions of calibration, certification, verification of all measuring and weighing devices/instruments used in Nigeria’s oil and gas industry.

“Reliance on decentralized, paper-based systems should be replaced with suitable IT systems. Additional metering should be installed on identified pipeline hotspots to highlight unidentified losses and enable rapid response to a precise location.

“Revenue retention by NNPC and its subsidiaries should be discontinued. Greater use should be made of IT systems to improve controls, eliminate inconsistencies and improve transparency by making possible a wider sharing of data.

“Government should eliminate Domestic Crude Allocation which creates more problems than it solves. Government should develop an explicit revenue collection framework for NNPC that facilitates financing and reigns in discretionary spending.

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 “There should be severe sanctions or revocation of license where applicable, for non-compliance to metering regulations or deliberate act of sabotage. Quick passage and assent of the Petroleum Industry Bill to address the funding requirements and other difficulties in a transparent and accountable manner.”

The communique also noted that, “Nigeria has faced significant challenges in managing the oil and gas sector and maximizing its the revenue potential for various reasons, including the impact of the COVID-19 pandemic and the attendant fall in crude oil prices and drop in demand for petroleum products.”

It also noted that inadequate hydrocarbon measurement infrastructure, oil theft, spillage, corruption, gas flaring, and gross mismanagement and maladministration of extractive resources have posed serious fiscal challenges to the nation.

“There is no direct correlation between physical production and the financial flows because the amount of oil produced at the wellhead is not reliably known. Nigeria lost 42.25 million barrels of crude oil, valued at $2.77 billion, to oil theft in 2019.

“State actors and analysts have attributed the country’s recent slide into recession to adverse developments in the oil and gas sector. Financial information systems are not adequate for the purpose of controlling financial flows from the sector.”

It added: “The flow of information currently consigns the Accountant-General of the Federation to a reactive role, where he is unable to exercise any effective control or authority. There is a poor collaboration among Government Agencies and poorly defined rules of engagement which encourages duplication of duties and rivalry. Domestic Crude Allocation has become the main nexus of waste and revenue loss from NNPC oil sales.”

Vanguard News Nigeria


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