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Nigeria earns zero revenue in one month from Crude Oil for the first time

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At a time like this when many oil exporting countries are following the international crude oil market with broad smiles, the Nigerian National Petroleum Company (NNPC) Limited posted zero revenue from crude oil export in the month of July 2022.

The latest data from the NNPC monthly presentation to the federation account allocation committee (FAAC) meeting of August 24, 2022 showed Nigeria earned zero dollars income from crude oil revenue in July 2022 as against $5.96 million earned in June 2022.

NNPC’s data showed Nigeria earned $75.88m from crude oil export in January 2022; $13.05m in February; $88.93m in March; $14.70m in April and $5.7. m in May.

There was no explanation for the zero revenue from export crude in the month of July.

But experts say no matter how the government tries to paper over the cracks, the signs of pressure in Nigeria are there for all to see.

“Low production rate, theft and pipeline vandalism are the main factors which rob Nigeria of the benefits of high cost of crude oil in the global market,” the Nigeria Economic Summit Group (NESG) said in its latest communiqué.

The managing director of the Nigerian National Petroleum Corp. (NNPC) sparked controversy this week when he said the value loss to thieves and sabotage is the equivalent of 700,000 barrels per day of crude oil production.

Mele Kyari even accused churches and mosques of keeping stolen fuel, an allegation religious groups rejected.

In the whole of July, NNPC’s records also showed that the state-owned oil company earned just about N400 billion from the gross domestic crude oil and gas receipts.

This implies that the amount spent on petrol subsidy for the month exceeded the total oil sold for the month by roughly N48 billion.

The records showed that the country has paid N2.04 trillion to offset subsidy payments in the 7-month period — while the payment of N1.04 trillion has been carried forward.

For the seventh month in a row, the company also failed to make remittances into the federation account owing to huge subsidy payments.

Beyond subsidy payment, NNPC’s report also showed the state-oil company is expecting N341 billion from four oil companies – Chevron Nigeria Limited (CNL), Mobil Producing Nigeria (MPN), Shell Petroleum Development Company (SPDC) and First E&P this September for outstanding payment for 7.265 million barrels of crude.

NNPC Limited indicated that N131.317 billion, the equivalent of $332.61 million for 2.84 million barrels of crude oil would come from Mobil, while $341.4 million for 2.81 million barrels of oil would be paid by Chevron.

Shell and First E & P would remit N45.23 billion, equivalent to $114.58 million and N29.71 billion, which is equivalent to about $72.27 million for 948,598 and 650,011 barrels of oil respectively, according to figures obtained from NNPC.

In its outlook for Nigeria’s energy sector, CardinalStone Partners Limited, an investment banking group predicted Nigeria’s oil sector will remain in trenches in the second half of 2022.

The analysts in their 2022 Mid-Year Outlook themed: ‘Same Challenges, New Shocks’ also noted that pre-election year concerns and fears of negative pass-through to inflation will likely limit the magnitude of currency adjustment made at the official market in the current year.

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