The most recent data, as unveiled by the Nigeria Extractive Industries Transparency Initiative (NEITI), a Federal Government agency, reveals that Nigeria incurred a staggering loss of approximately N1.96 trillion in 2021 due to oil theft, acts of sabotage, and adjustments in crude oil production.
In its freshly published 2021 Oil and Gas Sector Report, NEITI disclosed that the nation witnessed the disappearance of 68.47 million barrels of crude oil during the reviewed year.
Within the report’s section on crude oil production and exports, NEITI elucidated, “The total volumes of oil and gas production for 2021 were derived from the NMDPRA (Nigerian Midstream and Downstream Petroleum Regulatory Authority) sign-off documents.”
These documents bear the signatures of production companies, NMDPRA, and NNPC (Nigerian National Petroleum Company Limited), signifying the annual reconciliation of production figures.
Furthermore, the figures underwent reconciliation with the involved companies during the audit process.
In 2021, 54 companies engaged in crude oil production, contributing to an overall metered production of 634.60 million barrels.
Nonetheless, a distressing 68.47 million barrels vanished due to production adjustments, measurement errors, and theft or sabotage, resulting in a remaining fiscalized production figure of 566.13 million barrels for 2021.
NEITI underscored that this fiscalized production encompasses both crude oil and condensates.
Notably, this reconciled production data diverged from publicly disclosed information on the NUPRC (Nigeria Upstream Petroleum Regulatory Commission) website.
Additionally, the agency noted, “The total fiscalized crude oil production for 2021 was 566.13 million barrels.
This represents a 12 percent reduction from the 2020 production volume, which stood at 646.79 million barrels.”
Statistics from Statistica, an international statistical firm, illustrate that the average cost of crude oil in 2021 was $70.86 per barrel.
Concurrently, data from Exchange Rates UK, a global rates monitoring firm, reports that the average exchange rate between the dollar and the local currency in 2021 was N403.58 per dollar.
When we consider the loss of 68.47 million barrels in 2021, it becomes evident that Nigeria suffered a substantial financial setback, amounting to approximately $4.85 billion for that year.
When multiplied by the average exchange rate of N403.58 per dollar, this translates to a staggering N1.96 trillion in losses, underscoring the significant impact of oil theft and associated challenges in 2021.
Clement Isong, the Executive Secretary of the Major Oil Marketers Association of Nigeria, emphasized the urgency for the Federal Government to take decisive action to combat crude oil theft.
He stressed that this issue not only hampers Nigeria’s ability to meet its production quotas as sanctioned by the Organisation of Petroleum Exporting Countries (OPEC) but also deprives the country of much-needed foreign currency essential for importing goods.
Isong elaborated on the liquidity challenges in the I&E (Importers and Exporters) window, which significantly affects the ability to purchase products, such as petrol.
To procure these products, it necessitates a substantial amount, ranging from $25 million to $30 million, an amount that is often scarce in the I&E window.
This scarcity has repercussions on imports and economic operations.
