After releasing the FY 2022 financial statements, Oando Plc has followed up with a press statement to address its net loss of N81.2 billion incurred in 2022, citing militancy and pipeline vandalism as major culprits.

Despite reporting a gross turnover of N1.99 trillion during the fiscal year, the group posted a loss after tax of N81.2 billion, a significant downturn from the N39.2 billion profit after tax posted in 2021.

Speaking on the result, Wale Tinubu, Group Chief Executive of Oando Plc, noted, “The heightened militancy and pipeline vandalism acts within the Niger Delta region dealt a substantial blow to our upstream operations, resulting in a marked reduction in our crude production volumes due to the protracted shut-ins for repair following each incidence.

“This was further compounded by a major gas plant fire incident which also necessitated a lengthy downtime.

“Furthermore, a rise in our net interest expense due to increased interest rates on several of our major facilities in line with global rates increases, also contributed to our Loss after Tax position.

“In response, we have put in place definitive measures to bolster our production and cash inflows towards ensuring a speedy return to profitability by collaborating with our partners to institute a comprehensive security framework aimed at permanently curbing the persistent pipeline vandalism whilst concurrently exploring inorganic growth opportunities to increase our reserves and production capabilities.

“We have also implemented a strategic restructuring of our key facilities to ensure they align with our cash flow dynamics.”

Pipeline vandalism cost Nigeria N471 billion in 5 Years Economic implication of oil theft in Nigeria.

Theft and vandalism of oil installations is a major problem plaguing the oil and gas sector in Nigeria. The crime of oil theft has had a negative impact on the national economy and the business of local and international oil companies operating in the upstream sector.

Although there is no precise figure to quantify the financial impact of oil theft on the Nigerian economy, a study conducted by Dimkpa et al. (2023) estimates that Nigeria lost approximately $33.6 billion in oil revenue to oil theft between 2019 and 2022.

A significant economic implication for Nigeria has been the consistent decline in oil production. Nigeria’s average oil production in 2022 was at 1.45 million barrels per day, an almost 1-million-barrel decline from the 2.4 million barrels per day produced by Nigeria in 2012.

In 2022, Oando’s total upstream production amounted to 20,703 barrels of oil equivalent per day (boe/day). This comprised 4,939 barrels per day of crude oil, 472 barrels per day of natural gas liquids, and 15,292 barrels per day of natural gas.

This figure represents a 22.7% decline from the 26,775 boe/d output reported by the group in 2021.

According to the company’s press statement, the decline in production was attributed to downtimes caused by shut-ins for repairs and sabotage activities.

In 2022, Oando Plc sold approximately 21.8 million barrels of crude oil, representing a 25% increase from the 17.4 million barrels sold in 2021. The group also sold about 1.94 million metric tonnes of refined petroleum, representing a 101% increase from the 962,371 metric tonnes sold in 2021.

Despite recording a decline in oil output, the group was able to sell an increased amount of crude oil due to its contracts with the then Nigerian National Petroleum Corporation (NNPC), ultimately contributing to its 148% revenue growth in 2022.

In 2022, Oando sold crude oil at an average realized oil price of $101.55/barrel and a gas price of $14.74/Boe, compared to 2021’s prices of $62.14/barrel for crude oil and $9.95/Boe for gas.

OMLs 60 to 63 gulped about $77.7 million in capital expenditure (CAPEX) from Oando, while OML 56 and OML 13 gulped about $22.6 million and $200,000 respectively. The group also spent $1.4 million in capital expenditure (CAPEX) on other assets.

As of 2022, Oando owned 20% stake in OMLs 60 to 63, as Nigerian Agip Oil Company (NAOC) also owned a 20% stake.

However, Oando is in the process of purchasing NAOC’s 20% stake in the oil fields, which will push its stake up to 40%.

Dangote Petroleum Refinery has announced another reduction in the prices of both diesel and aviation fuel to N940 and N980 per litre, respectively.

The development comes days after the refinery reduced diesel price to N1,000 per litre.

In a statement on Tuesday, the refinery said the price change of N940 is applicable to customers buying five million litres or more from the refinery, while those purchasing one million litres or more will pay N970.

According to the company, this marks the third major reduction in diesel price “in less than three weeks when the product sold at N1,700 to N1,200 and also a further reduction to N1,000 and now N940 for diesel and N980 for aviation fuel per litre”.

Speaking on the new development, Anthony Chiejina, head of communication, Dangote Group, said the new price is in tandem with the company’s commitment to alleviating the effect of economic hardship in Nigeria.

“I can confirm to you that Dangote Petroleum Refinery has entered a strategic partnership with MRS Oil and Gas stations, to ensure that consumers get to buy fuel at affordable price, in all their stations be it Lagos or Maiduguri,” he said.

“You can buy as low as 1 litre of diesel at N1,050 and aviation fuel at N980 at all major airports where MRS operates.”

He added that the partnership will be extended to other major oil marketers.

“The essence of this is to ensure that retail buyers do not buy at exorbitant prices,” he said.

“The Dangote Group is committed to ensuring that Nigerians have a better welfare and as such, we are happy to announce this new prices and hope that it would go a long way to cushion the effect of economic challenges in the country.”

Reacting to the latest development, Ajayi Kadiri, director-general of the Manufacturers Association of Nigeria (MAN), said the decision “to first crash the price from about N1,750/litre to N1,200/litre, N1,000/litre and now N940 is an eloquent demonstration of the capacity of local industries to positively impact the fortunes of the national economy”.

“The trickledown effect of this singular intervention promises to change the dynamics in the energy cost equation of the country, in the midst of inadequate and rising cost of electricity,” Kadiri said.

He said the reduction will ease the high inflation rate in the country, and have far-reaching impact on critical sectors like industrial operations, transportation, logistics, and agriculture.

Kadiri added that companies will be back in operation due to the price reduction.

Dangote Petroleum Refinery has announced a further reduction in the prices of diesel and aviation fuel to N940 and N980 per litre, respectively.

The development comes days after the refinery slashed diesel price to N1,000.

Details later …