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Earlier this week, news of a fall in oil price below $0 per barrel made wave across the world. However, against the wide misconception on its meaning and implications particularly to the distressed Nigerian economy is the truth that the slump in the US crude oil futures below $0 per barrel does not reflect the reality in the global oil market but is a mere drop in US crude oil price by the New York Mercantile Exchange (NYMEX).
Oil money makes the Nigerian government tick and certainly keeps many multinational oil companies in the business. Be sure, crude oil makes the world go round. You can tell Saudi Arabia is currently using the oil power to caution other producers, especially world powers like Russia.
Though Nigeria produced an estimated 170 trillion cubic feet of gas, more than 70% is flared off. After Russia, Nigeria flares the most gas in the world. Between 2012 and 2020, Nigeria flared over 1.5 billion standard cubic feet of its natural gas. During the process of flaring gas within those years, about 82 million tonnes of CO2 was emitted. For the quantity of CO2 emitted, Nigeria Gas Flare Tracker estimated that ideally, oil companies engaged in gas flaring should pay about $3.2bn as a penalty. That’s 1.152 trillion naira, which is enough to cover for the coronavirus induced 1 trillion naira intervention by the Central Bank. It could have cushioned 77 percent of the 1.5 trillion naira cut that the 2020 budget is witnessing.
Nigeria has about 38bn barrels of unexplored bitumen resources weighing about 42.74 billion metric tonnes. It ranks 6th in the list of countries with the most bitumen wealth. Nigeria’s untapped bitumen can be found Ogun, Ondo, Delta, Rivers, and Balyesa States. Geologically, Nigeria’s bitumen reserves have close similarities with the bitumen reserves in Canada and it is envisaged if Nigeria’s bitumen would be extracted, similar methods as have been used in Canada would be adopted. In view of this, similar impacts are envisaged between the two countries.
The Minister of Petroleum, President Buhari has failed to disclose about 11.43 Trillion naira remittances made by international oil and gas companies between 2014 and 2018. An analysis by DATAPHYTE has shown that at least $37.46 billion has been remitted by oil and gas companies from Europe and Canada to government entities in Nigeria. The proceeds between 2014 and 2018 convert to ₦11,425,208,946,053 at an exchange rate of ₦305 to $1.
According to the NNPC Monthly Financial and Operations Report (MFOR) of December for 2015, 2016, 2017 and 2018, 8560 cases of pipeline vandalism were reported in the last four years. Year in year out, Nigeria loses significant proportions of its oil revenues to this menace that is as old in history as oil drilling in the country
At least 137 billion naira of bridging allowance is unaccounted for by the Petroleum Equalization Fund (Management) Board, an analysis by DATAPHYTE has shown.
A recent forensic analysis on the claim by the National Petroleum Investment Management Services (NAPIMS) regarding $5billion savings on the cost of production, has proven bogus and unverifiable. The claim further calls for scrutiny accrued revenue to the Federation in the same period. In August 2017, NAPIMS raised the hope of stakeholders in the oil sector amidst the oil price volatility stating the agency had driven down the cost of oil production from $78 per barrel to $23 per barrel, representing a 70.5 per cent drop in production cost. It also reported that during this period, the organization saved the country $3 to $5 billion dollars in cost of production
Oil contributes an estimated 93.6% of Nigeria’s foreign exchange earnings, 66.5% of annual revenue, and 10% of gross domestic product.
