Ike Amos
05 December 2016, Sweetcrude, Abuja — The Nigerian National Petroleum Corporation, NNPC, spent N201.657 billion on petroleum subsidy, crude oil and products losses and pipeline repairs in 12 months, between October 2015 and September 2016.
Specifically, in its financial and operational report for September 2016, the NNPC disclosed that the represented 21.07 per cent of its total domestic crude oil and gas sales proceeds of N957.133 billion in the 12-month period.
Giving a breakdown of the spending in the period under review, the report stated that the NNPC spent N57.77 billion on petroleum subsidy; N20.192 billion was recorded as crude oil losses; N16.27 billion was recorded as product losses, while pipeline repairs and management cost gulped N107.428 billion.
The report stated that ceaseless vandalism, crude and products theft have continued to destroy value and put NNPC at a disadvantaged competitive position.
According to the report, reduction in vandalism will indeed unlock several industry upsides which include improved upstream oil production due to reduced pipeline disruptions, improved refinery utilisation due to increased crude oil feed from restored pipelines, and reduction of crude/product losses.
It noted that a total of 3,152 vandalised points were recorded between October 2015 and September 2016, adding, therefore, that crude and products losses have continued to cost NNPC and the country huge amount of money.
For instance, the report stated that the Forcados Oil Terminal (FOT) Export line, a 48-inch export line, was vandalised in February 2016, crippling crude oil export from the terminal by Nigerian Petroleum Development Company (NPDC) and other Joint Venture (JV) Partners’ using the line.
According to the report, the vandalisation also led to the declaration of force majeure by Shell Petroleum Development Company (SPDC) and production shut-in of about 300,000 barrels of oil per day.
Similarly, the vandalisation also affected crude oil and gas export sales, as the report disclosed that total export proceeds of $114.18 million were recorded in September 2016 as receipt against $180.93 million in August 2016.
In particular, it noted that contribution from crude oil amounted to $73.71 million while gas and other proceeds totalled $40.47 million.
It said, “Of the total receipt, the sum of $114.18 million were remitted to fund JV cash Call, while nothing was remitted to the Federation Account. Poor performance is attributable to attack and sabotage of oil facilities in the Niger Delta.
“At Forcados Terminal alone about 300,000 barrels of oil per day, b/d, were shut in since February 2016 following Force majeure declared by SPDC. A number of crude oil Liftings were deferred until the repair is completed. Other major terminal affected by the renewed spate of vandalism includes Bonny, Usan, Que Ibo terminals, and the recent attack on the Nembe Creek Trunk Line (NCTL).”