The country has lost at least N689bn to the suspension of exports of Forcados, one of the nation’s largest crude oil grades, since February.
Friday, October 21, 2016 marked exactly eight months that Shell declared force majeure on the export of Forcados.
The force majeure, a legal clause that allows it to stop shipments without breaching contracts, came a week after the Forcados export line was attacked by militants in the Niger Delta. It has yet to be lifted as of the time of filing this report.
The International Energy Agency had in April estimated that Nigeria could lose about $1bn (N197bn) in revenue by May, when repairs of the Forcados terminal were expected to have been completed.
The IEA said, “The Forcados terminal in Delta State, one of Nigeria’s biggest terminals, was scheduled to load 250,000 barrels of crude per day. At $40 per barrel, Nigeria could stand to lose about $1bn between February, when force majeure was declared, and May, when repairs are expected to be completed.”
But as of Friday October 21, the force majeure had not been lifted.
At an average oil price of $40 and exchange rate of N197 to the dollar, the country lost at least N246.4bn from February 21 to June 19.
Using an average oil price of $48 and an exchange rate of N300/dollar, the loss recorded from June 20 to October 21 amounts to N442.8bn.
The Ministry of Finance on Friday said declining oil production and export volumes due to militancy and large-scale crude theft cut the government’s gross revenue in September by about 12 per cent from August to N279.75bn ($8bn).
The ministry said that despite the rally in global oil prices averaging $48.43 per barrel in June, the nation’s export volume declined by 1.15 million barrels in that month, resulting in a $46.52m drop in oil export sales for the government.
Nigeria’s oil exports sales are accrued to the government’s account two or three months later.
“Force majeure was declared at the Bonny Terminal and there was a subsisting force majeure at the Forcados Terminal. Shut-in and shutdown of the pipeline for repairs and maintenance also contributed to the drop in revenue,” the ministry said in a statement.
Oil exports account for about 80 per cent of the Nigerian government revenue.
The nation’s oil output plummeted to near 30-year lows of around 1.4 million barrels per day in May from 2.2 million bpd earlier in the year as attacks on oil facilities in the Niger Delta rose at an alarming rate.
The Nigerian National Petroleum Corporation, in its latest monthly report, said its subsidiary, the Nigerian Petroleum Development Company, lost over N27bn in July due to the force majeure declared by the Shell as a result of the vandalised 48-inch Forcados export line.