An oil company struggling to produce oil

The NNPC’s accounts for June show a group operating deficit of N26.5bn (US$85m), compared with a rare profit the previous month of N300m. Revenue from the Nigerian Petroleum Development Company amounted to just N6bn, and so far off the budget (admittedly 2015’s) of N55bn. Any energy company will struggle to make good the impact of sabotage on its oil and gas operations. The corporation’s commentary estimates average crude output for June at 1.69 mbpd, and the continuing shut-in at the Forcados terminal at 380,000 b/d.

The decline in group revenues from N143bn in May to N118bn is also attributable to underperformance at the group’s four refineries. Sales by the Pipeline and Products Marketing Company (PPMC), another subsidiary, fell from N114bn to N97bn. The distribution costs for products also increased.

The H1 operating deficit of N92bn compares with the (2015) budget for the period of N220bn and the full-year deficit of N267bn last year. The success of the new leadership at the corporation, since changed again, has been its expenditure compression. Net costs at central headquarters (CHQ) in H1 were limited to N52bn. The budget was set at N110bn.

The corporation is not a security agency, and will continue to report trend deficits without a lasting settlement in the Niger Delta. The report notes 261 PPMC pipeline breaks in June, the highest since January.

An oil company struggling to produce oil

Over the 12 months to June, the NNPC‘s crude oil and gas receipts totaled US$3.42bn. Other than a token payment to the federation account in June, the amount was paid in full towards joint-venture (jv) cash calls. The payments are falling well behind budget, and the corporation estimates its arrears under the jv arrangements at US$5bn. The industry quotes higher figures.

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