Militancy pushes NNPC to end July oil trade in N24.18bn deficit

NNPC Tower, Abuja25 September 2016, 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.

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