Nigeria’s revenue from the exports of crude oil and gas fell to $2.62bn in 2020 from $4.85bn in the previous year as the COVID-19 pandemic triggered a sharp decline in prices and demand for the commodity.
Oil and gas account for about 50 per cent of the Nigerian government revenues and over 90 per cent of export earnings but represent only about 10 per cent of the country’s Gross Domestic Product.
The country’s earnings from oil and gas exports, which stood at $626.79m in January 2020, tumbled to a record low of $54.09m in October, according to data from the NNPC.
Total revenue from oil and gas exports stood at $282.32m in February; $362.18m in March; $193.05m in April; $133.16m in May, and $378.42m in June.
Oil and gas export revenue stood at $122.44m in July; $100.88m in August; $120.49m in September; $125.71m in November and $125.25m in December.
The proceeds from the sale of domestic crude oil and gas stood at N1.54tn in 2020, down from N1.57tn in 2019, data collated from NNPC reports showed.
A total of 445,000 barrels per day of crude oil is allocated to NNPC for the purpose of supplying refined products for domestic consumption.
“NNPC purchases its allocated crude oil from the federation at the prevailing international market price per barrel and payment is due 90 days after the Bill of Lading date. NNPC obligations are paid in naira based on CBN-determined exchange rate in the month of lifting,” the corporation said.
The United States Energy Information Administration had said in November that Nigeria and other members of the Organisation of Petroleum Exporting Countries would see their combined net oil export revenue fall in 2020 to its lowest level since 2002.
The EIA forecast that OPEC members would earn about $323bn in net oil export revenues in 2020, down from an estimated $595bn in net oil export revenues in 2019.
“If realized, 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, noting that crude oil prices had fallen as a result of lower global demand for petroleum products because of responses to COVID-19.
The EIA said export volumes had also decreased under OPEC agreements limiting crude oil output that were made in response to low crude oil prices and record-high production disruptions in Libya, Iran, and to a lesser extent, Venezuela.
The NNPC, in its latest monthly report, said a total export sale of $72.65m was recorded in January 2021, decreasing by 17.43 per cent compared to last month.
It said crude oil export sales contributed $24.32m (33.48 per cent) of the dollar transactions compared with $23.49m contribution in the previous month, while the export gas sales amounted to $48.33m in January.
“The January 2020 to January 2021 crude oil and gas transactions indicated that crude oil and gas worth $2.33bn was exported,” the corporation said.
The federation crude oil and gas lifting are broadly classified into equity export and domestic, according to the NNPC.
Both categories are lifted and marketed by NNPC and the proceeds remitted into the Federation Account.
The national oil company said, “Equity export receipts, after adjusting for Joint Venture Cash Calls, are paid directly into Federation Account domiciled in the Central Bank of Nigeria.
“Domestic crude oil of 445,000bpd is allocated for refining to meet domestic products supply. Payments are effected to Federation Account by NNPC after adjusting crude and product losses and pipeline repairs and management cost incurred during the period.
NNPC also lifts crude oil and gas other than equity and domestic crude oil on behalf of the Department of Petroleum Resources and the Federal Inland Revenue Service, proceeds of which are remitted into the Federation Account.
OPEC, in its latest monthly oil market report, said the overall physical crude market fundamentals remained weak in March, which was reflected in flattening price forward curves and low crude differentials.
It said the factors that influenced crude differentials included high availability of crude volumes for March and April loadings, particularly in the Atlantic Basin; and soft crude demand from refiners due to spring refinery maintenance in Asia.
Nigeria, Africa’s biggest oil exporter, produces some of the easiest-to-refine crude that typically commands a premium over Brent, the global oil benchmark.