Yemisi Izuora/Joseph Bakare
The Nigerian National Petroleum Corporation, NNPC whose oil trade fortune is in deficit is excited that atleast its Direct Sale, Direct Purchase initiative is turning into a fortune.
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.
According to the Corporations report, 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.
On refinery performance, the NNPC said its refineries in Kaduna, Warri and Port Harcourt had a good outing in July 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.
The report indicated that 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.
On the other hand the NNPC noted that militancy in the Niger Delta region impacted negatively on some of its operations as it recorded 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.
The NNPC said the turbulence in the country’s oil and gas sector had grossly impacted its activities in the month.
“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.