Over recent weeks, Nigeria’s oil output has dropped to about 1.6m barrels a day from the usual 2.2m barrels as a result of renewed militancy in the Niger Delta. This has significantly cut government revenue but has created the addition problem of Nigeria being unable to fulfil supply contracts as the blowing up of pipelines has led to a scarcity of crude oil.
Only yesterday, new militant group the Niger Delta Avengers (NDA), rejected an offer of dialogue from the federal government and blew up another Chevron crude oil pipeline in Delta State. It is now expected that Nigeria’s crude oil export may drop further in the days ahead and major refineries worldwide have concluded plans to stop purchasing crude oil from Nigeria due to rising uncertainties about the country meeting up with deliveries.
Yesterday’s attack came as a bombshell to the governors of oil producing states, who met, with acting president, Professor Yemi Osinbajo, service chiefs and other functionaries on how to end pipeline attacks in the troubled region. After the meeting, the government had announced a two-week ceasefire to build confidence with the militants for negotiation but this appeared to have been ignored.
If the militancy continues and Nigeria can no longer fulfil her delivery obligations, the government may struggle to fund its 2016 budget. Already, there are concerns that supplies may not meet targets set down in the budget.