As campaigns ahead of Nigeria’s 2019 general elections get to a crescendo, it is not unusual for politicians canvassing for votes from the electorates across the country to make correct, and most times, bogus claims.
As the number one citizen of the country, when President Muhammadu Buhari says anything, it may be difficult to controvert him.
The president and his re-election campaign team, who have been touring different parts of the country to solicit for votes, were in Kogi State, North-Central, Nigeria on January 16, 2019.
Delivering his speech at the rally, attended by a mammoth crowd of supporters, Buhari warned Nigerians not to make the “mistake” of voting the Peoples Democratic Party (PDP) into power.
The PDP is currently the lead opposition party in Nigeria which held power between 1999 and 2015.
Buhari said a vote for the PDP would return the country to “the ugly past.”
“I am warning you; don’t make any mistake of choosing any PDP candidate. What they will try to do is to cover the theft they have committed against the nation,” he said.
The claim
While criticising the PDP for squandering the nation’s wealth, the president claimed that Nigeria produced 2.1 million barrels of oil per day at an average price of $100 per barrel under the party’s administration.
He said “I have challenged everybody in Nigeria to check in Europe, America and Asia that Nigeria was producing 2.1 million barrels per day at the cost of $100 per barrel. So, Nigeria was earning 2.1 million barrels, times $100, times 16 years. Where was that money?’’
Three claims made by the president were fact-checked.
Claim 1
The first claim by the president was that the country produced 2.1m barrels of oil in the last 16 years under the PDP.
When counting Nigeria’s crude oil production condensates, an ultra-light oil produced nearly in all the country’s oilfields, although in small quantity, are also counted as crude.
Although there is no industry consensus on how much of condensates the country produces, the ultra-light oil contributes between 200,000 to 400,000 barrels per day (bpd) to Nigeria’s production, and are blended into crude exports or marketed as crude oil.
So, when Buhari said Nigeria was producing 2.1 million barrels per day of crude, the assumption is that he was referring to both crude and condensates.
The Department of Petroleum Resources (DPR) is Nigeria’s oil industry regulator and publishes annual oil and gas industry report that documents yearly crude oil and condensate production, as well as other operations in the industry. The Nigerian National Petroleum Corporation (NNPC) also publishes an annual statistical bulletin that contains yearly oil and condensate, as well as gas production figures.
Daily Trust on Sunday thoroughly compared and analysed crude oil and condensate production volumes published by the DPR and NNPC between 1999 and 2015. Both data showed that average crude oil production between 1999 and 2015 was around and sometimes above 2.1 million barrels per day, except in 2002 when output was 1.98m b/d.
Also, statistics from the Organisation of Petroleum Exporting Countries (OPEC) analysed within the 16-year period showed that Nigeria’s production was largely within the 2m b/d mark.
Although the OPEC data was based on secondary sources (supplied by consultants and price-reporting agencies quoted by OPEC) and the fact that the cartel reports only crude output, not condensate of its 15 member-country, oil production in Nigeria was above 2m b/d for 9 out of 16 years.
Verdict
Buhari’s claim that Nigeria was producing 2.1 million barrels per day of crude for 16 years is largely true.
Claim 2
Buhari’s claim that the country sold crude at the average cost of $100 per barrel was checked against every well known oil pricing benchmark. Because there are many types and grades of oil, there are some important benchmarks that are indispensable for referencing crude on the global oil market.
The OPEC (reference) Basket, which is an average of prices of the various petroleum blends that are produced by members, including Nigeria, is one of the most significant benchmarks for crude oil prices worldwide.
OPEC publishes annual reports about the world oil market, which our reporter analysed for the period from 1999 to 2015.
Another important crude benchmarks is the Brent crude against which Nigeria’s oil is mostly priced. Brent crude price from 1999 up to 2015 was compiled from Statista https://www.statista.com/statistics/262860/uk-brent-crude-oil-price-changes-since-1976/ , one of the world’s leading provider of market and consumer data.
It is also worthy of note that two major pricing components, namely, the average dated Brent and the Official Selling Price (OSP) are usually applied on crude exports by the NNPC on behalf of the federation.
Irrespective of whatever template and assumptions the entire data set sampled, it showed that between 1999 and 2015, oil price only averaged $100 per barrel in 2011, 2012 and 2013. Overall, the average price of crude traded below $100 per barrel for most of the 16 years.
Verdict
No matter the basis or assumptions, President Buhari’s claim that oil sold at the average cost of $100 per barrel is incorrect.
Claim 3: Faulty arithmetic
The president, who was once a petroleum minister, went further to tell the teeming fans that “Nigeria was earning 2.1 million barrels, times $100, times 16 years,” inferring from his multiplication that $3.360 billion oil earning may have been frittered away during the period.
It is instructive to point out that the structure of the oil industry is complex and oftentimes tricky that such calculations are not as simple as they look. In Nigeria, just as elsewhere, oil is produced at a cost per barrel, which the president did not consider in his calculation.
Also, various production arrangements entered by the government, like Joint Ventures (JVs), Production Sharing Contracts (PSCs), Service Contracts (SCs) etc with international and local oil companies, is what contributes to the overall crude oil and gas production from where the Nigerian federation takes its share.
The NEITI, NNPC and DPR data analysed shows that the volume of oil produced per day is shared based on the various arrangements (between the government and all parties/oil companies) and the entire volume doesn’t all end up being exported or lifted by the parties, due to many factors. So, not all the oil produced is owned by the government.
However, other crude oil-related earnings still accrues to the country like taxes, fees and levies, such as royalty, Petroleum Profit Tax (PPT), signature bonus, gas flare penalty, and other flows as shown in the NEITI data.
Verdict
Buhari’s claim that the country was earning 2.1 million barrels, times $100, times 16 years, is not only incorrect but a faulty arithmetic that should not be made by someone who has held the position of a petroleum minister.
