Nigeria Lost N350bn To Crude Outage In August | Independent Newspapers Limited
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Nigeria Lost N350bn To Crude Outage In August

Excess Crude Account, CRUDE outage
Posted: Sep 8, 2016 at 5:00 am   /   by   /   comments (0)

Charles Okonji



Lagos – There is a strong indication that Nigeria, following the incessant attacks on oil and gas facilities in the Niger Delta by the militants, lost over N350 billion (US$1.037 billion) in August.

The report, which was just released by the Energy Information Administration (EIA)), an official energy statistics from the United States government, revealed that Nigeria’s outages decreased slightly in August, but they remained at roughly 0.7 million barrels per day.

According to the report, the major crude oil streams – Bonny Light, Forcados, Brass River and Qua Iboe – all continued to experience production disruptions and the crude oil price of $47.81 per barrel, the 700,000 barrels per day amounted to US$33.467 million loss per day.

It was also gathered that the depressed state of oil prices, which had afflicted hundreds of oil companies around the world, equally impacted on the tax receipts of the Federal Government, which it normally received from oil exploration and production firms.

Some energy experts, who did an in-depth analysis of some economies, especially Nigeria and Norway, and the current global oil prices impact, revealed that Nigeria had been worst hit because of lack of planning ahead, which Norway relied on its Sovereign Wealth Fund.

According to these industry analysts, while Nigeria, an OPEC member, declared recession, Norway, reported growth in its second quarter.

Even when oil had recovered from February’s low of just over $26 per barrel, these experts, however, noted that the current price was still less than half what producers were getting just two years ago.

Nigeria’s second quarter GDP, it was gathered, fell by more than two percent, compared to last year, after slipping by 0.4 percent in the first quarter. Two successive quarterly declines meet the definition of an economy in recession.

The report stated: “Nigeria is not only hit by low oil prices. Its oil output has also fallen sharply because of a series of rebel attacks on infrastructure. That, in turn, has impacted on manufacturing and retail sectors which endure chronic power outages.

“If this was a one-month aberration it would be a walk in the park. But instead it is turning into a walk on the Ark. The slump in oil prices has drained Nigeria’s foreign currency reserves.

“To stem the outflow of cash from the country, the government introduced strict restrictions on importing goods that it said could be produced locally. But that decision has also reduced the flow of raw materials to the country’s manufacturers.

“Norway may be a wealthier nation, without the risk of insurrection, and toying with the spoils of its indemnity, the sovereign wealth fund.

“It is precisely for crises that the fund was set up decades back, and unlike the UK, the benefits of its oil output have been carefully stowed away in the fund to help in an hour of darkness.

“Norway’s offshore oil, gas and shipping activity shrank by 1.4 percent in the quarter, while mainland GDP grew just 0.4 percent.

“The government has been forced, for the first time, to tap the nation’s huge sovereign wealth fund. Norway’s central bank said the country might be forced to withdraw more than $9 billion from the $888 billion fund in 2016 to make up for the collapse in oil revenue.

“The galling reality is that the fund was supposed to cosset the economy from external risks to the economy. In a sense, that is what the global oil glut is all about.

“On the other hand, it is ironic that the very source of funding is the cause to raid the fund now. And the other issue is, if we continue to see low oil prices for years to come, how long can Nigeria stave off an escalating crisis and Norway rely on its (at present) huge fund?” the report posited.