Although crude traded in the…
Oil held onto gains after…
Chief Martin Onovo, a petroleum engineer and a 2011 candidate for the presidency of Nigeria with the Action Alliance, gave an interview with allAfrica.com in which he discussed Nigeria’s current economic and political problems, and how the $1billion of oil stolen each month is only a natural result of a corrupt, immoral government.
Of all OPEC members, Nigeria is the only country that has to import petroleum products, all others have domestic refining industries that can produce refined products to meet the country’s personal demand, with any excess crude oil then exported.
Onovo explains that fuel is critical to producing energy, and setting the cost at which that energy is sold. By importing the fuel, the costs automatically jump, impacting on the transportation and industrial sectors, as well as the general households; Nigeria is suffering the consequences in terms of “devaluation, macro-economic instability, unemployment, industrial crisis and ultimately a reduction of GDP.”
Related article: Nigeria’s Oil Industry Threatened by Petroleum Industry Bill
Nigeria currently has a refining capacity of 445,000 barrels a day, which Onovo claims is over 40 million litres a day gasoline, far more than the country’s current demand. By restoring refineries to operate at their maximum capacity Nigeria could reduce its needs for imports, and by adding to refining capacity it could even begin to export high value refined products at a far higher margin than crude oil.
The problem is, Onovo claims, that Nigeria lacks the political leadership to set a clear direction and lead the country out of the dark. At the moment Nigeria unnecessarily wastes potential revenues by not utilizing its domestic refineries efficiently, and then accepts unnecessary costs by paying for “transportation, marketing and overhead cost, insurance, port taxes, brokerage charges exporting crude,”and then paying for “all that again bringing in refined product.”
Onovo also blames Goodluck Jonathan’s government for the failing national security, which has led to unrest, violence, and a boom in oil theft. The Federal Ministry of Finance states that the theft of crude oil is costing Nigeria 350,000 barrels a day, which at $100 a barrel equates to $1 billion a month in lost revenues. Onovo said that “crude oil theft is a reflection of the collapse of national security.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com