National crude oil and condensate production picked up to 1.78 mbpd in October from 1.65 mbpd. The average for January-October of 1.82 mbpd falls well short of the projection of 2.20 mbpd in the 2016 budget, which explains many of Nigeria’s macroeconomic woes. Diversification away from oil requires a healthy stream of oil revenues. That depends in turn on calm in the Niger Delta. The NNPC’s Financial and Operations Report for November notes that at least 300,000 b/d had been shut-in since February due to sabotage of the Forcados line.
The report notes a decline in pipeline breaks due to vandalism to 43 in November from 101 the previous month and 214 in November 2015.
We understand that the FGN has restored monthly allowances to the former militants in the delta to the level under the previous administration. This step would have been taken reluctantly but cannot be faulted since it stands a reasonable chance of buying peace.
The corporation’s operating deficit widened slightly in November from N16.9bn to N18.7bn (US$61m). Spending rose from N174.4bn to N206.4bn (US$680m) although the increase was due in part to research and development in the Chad Basin and the Benue Trough.
The January-November operating deficit of N181bn compares with N255bn in the same period of 2015. Cost control has been impressive in several respects but the return of healthy surpluses hinges upon security in the delta.
Sources: NNPC, Financial and Operations Report, November 2016; FBNQuest Research
The corporation’s reports also track the supply of gas to power plants. We see again the damage due to sabotage: in November the plants generated 2,344 megawatts (MW) from gas supplied by the industry. Generation has not exceeded 3,000 MW since February.
