Militancy Pushes NNPC to End July Oil Trade in N24.18bn Deficit

• Direct sales, direct purchases yield $336m in four months
Chineme Okafor in Abuja

The Nigerian National Petroleum Corporation (NNPC) Thursday disclosed that militancy in the Niger Delta region ensured that it ended its crude oil and gas trading in the month of July, a deficit note, recording yet another loss worth N24.18 billion.

It however said the July operational loss was some figures below what it recorded in June. The corporation in June reported a trading deficit of N26.51 billion.
Disclosing this in its latest monthly financial and operations report, NNPC said the turbulence in the country’s oil and gas sector had grossly impacted its activities in the month.

The corporation also had some positive report from its management of the Direct Sale, Direct Purchase (DSDP) framework it adopted in April to ensure supply of refined products in the country, saying that an average $53 million monthly saving was made from it. These savings, it said had resulted to a total of $336,379,854.98 for it in four months – April to July 2016.

“The  degree  of  turbulence  in  the  nation’s  oil and  gas  sector  due  to  renewed  militancy  has grossly  impacted  on  oil  and  gas  production  with  its  attendant  consequences  for  the economy. In July 2016, operations, about 311 vandalised points were recorded.  This  12th publication  of  NNPC  monthly  financial  and  operations  report  indicates  a trading  deficit  of  N24.18 billion  in  July  2016  as  against  N26.51 billion  deficit  reported  in June,  2016,  the  net  cash  flow  improved  by  8.77 per cent or  N2.32 billion  in  July  2016,” said the report which was released in Abuja.

The NNPC however said: “This improvement  was  largely  due  to  increase  in  revenue  stream  from  NPDC  and  PPMC, despite  the  upsurge  in  upstream  and  downstream  vandalised  points.”
The report also stated that its subsidiary, the Nigerian Petroleum Development Company (NPDC) could not take in a substantial portion of its crude oil sales for  the  month estimated to be in excess of  N27 billion due  to  a subsisting force  majeure  declared  by  Shell Petroleum Developemt Company (SPDC) as  a  result  of  the vandalised  48-inch Forcados export line.

On the performance of the DSDP, the report stated: “The  DSDP  main  contract  which  started  in April,  2016,  has  so  far  recorded  average monthly,  savings  of  $53 million  despite  the  challenges  of  low  oil  prices  and  reduced crude  oil  and gas  production  caused  by  militant  attacks  on  oil  and  gas  assets.  The  new contract  has  indicated  a  total  savings  of  $336,379,854.98  between  February  and  July 2016.

According to the report, the  DSDP  was  initiated  to  ensure  full  recovery  of  crude  oil  sales  value  and  delivery  of 100 per cent  federation  revenue  from  domestic  crude  allocation which is 445,000 barrels per day in  place  of  the previous  offshore  processing  and  crude swap  arrangements  which  resulted  in  huge losses.
The corporation equally disclosed that its refineries in Kaduna, Warri and Port Harcourt had a good outing in the month under consideration with a surplus posting of N0.78 billion.

“The combined value of output by the three refineries (at import parity price) for the month of July 2016 amounted to N20.09 billion while the associated crude plus freight cost was N19.31 billion, giving a surplus of N0.78 billion after considering overhead of N7.38 billion. Despite these challenges (irregular crude supply and impact of pipeline vandalism) the domestic refineries have a consolidated positive cash flow for the month under review due to favorable products price variance and ongoing restoration of the refineries,” it explained in the report.

According to it: “Total  crude  processed  by  the  three  local  Refineries  for  the month was  126,756 metric tons (MT) (929,275 barrels) and intermediate of  40,640MT (297,972bbls)  which  translates  to  a  combined  yield  efficiency of  77.82 per cent compared  to crude  processed  in  June  2016  of  225,770MT  (1,655,346bbls)  with  a  combined  yield efficiency of 80.39 per cent.”

“For  the  month  of  July  2016,  the  three  refineries  produced  139,2841MT of  finished petroleum products  out  of  126,756MT  of  crude  processed  and  intermediate  of 40,640MT  at  a  combined  capacity  utilisation  of  6.74 per cent compared  to  12.40 per cent  combined capacity  utilisation  achieved  in  the  month  of  June  2016,” it added.