The country’s earnings from crude oil export have continued to fall, as latest data from the Central Bank of Nigeria showed that the volume of crude export dropped by 10.23 million barrels in the month of May.
At the official exchange rate of N315.5 to a dollar, and an average of $47.59 per barrel of crude during the review period, Nigeria’s earnings from the export of the commodity dropped by N153.5bn in May.
The country’s crude oil export opened at 1.45 million barrels per day or 44.95 million barrels in the month of January, but it recorded declines in the preceding months and reduced to 0.9 million bpd or 27.9 million barrels in May.
In April, Nigeria’s crude export stood at 1.23 million bpd, but this dropped by 330,000 bpd in May.
According to the CBN, the drop in oil export was largely due to destruction of oil and natural gas infrastructure in the Niger Delta by militants.
The apex bank, in its report for May 2016, said, “Nigeria’s crude oil production, including condensates and natural gas liquids, stood at an average of 1.35 million barrels per day or 41.85 million barrels in the review month. This represented a decline of 0.33 million bpd or 19.6 per cent below the average of 1.68 million bpd or 52.08 million barrels recorded in the preceding month.
“Crude oil export stood at 0.90 million bpd or 27.90 million barrels, which represented a decrease of 26.83 per cent, compared with 1.23 million bpd or 38.13 million barrels recorded in the preceding month. The development in crude oil production was attributed largely to the destruction of oil and natural gas infrastructure in the Niger Delta by militants.”
It, however, noted that allocation of crude oil for domestic consumption remained at 0.45 million bpd or 13.95 million barrels during the period under review.
It added, “At an estimated average of $47.59 per barrel, the average spot price of Nigeria’s reference crude, the Bonny Light, indicated an increase of 12.6 per cent, compared with the level in the preceding month. The development was attributed, largely, to increasing global oil supply outages and the growth in global oil demand, plus ongoing declines in the United States rig count and in crude oil production.”
The report put the United Kingdom Brent at $44.77 per barrel, the WTI at $46.61/b, and the Forcados at $47.19/b, adding that the commodities exhibited similar trends as the Bonny Light.
“The average price of OPEC basket of 11 selected crude streams stood at $43.23/b in May 2016. This represented a rise of 14.2 per cent, compared with the average price of $37.86/b recorded in the preceding month. It, however, showed a decline of 30 per cent relative to the level in the corresponding period of 2015,” it added.
Analysts have condemned the continued destruction of oil installations in the Niger Delta by militants, stressing that the development has put a serious strain on the country’s foreign exchange earnings.
The Director of Emerald Energy Institute, University of Port Harcourt, Prof. Wumi Iledare, told our correspondent that “the destruction of oil installations in Nigeria is costing our economy so much, let alone how these activities have so depleted our forex reserves, which is not good for a developing economy like ours.”
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.
The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.
The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.
The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.
Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.
The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
Oil Prices Recover from 4 Percent Decline as Joe Biden Wins
Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.
This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.
Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.
On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.
“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.
“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.
“Either you’re crimping energy demand or consumption behavior.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
Revenue of OPEC Members to Drop to 18 Year Low in 2020
The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.
EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.
“If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.
The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.
It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.
It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.
“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”
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