The NNPC’s accounts for October show a group operating deficit of N16.9bn (US$55m), little changed from N17.2bn the previous month. The driver was an improved performance from the Pipeline and Products Marketing Company (PPMC), which boosted its sales to N112.0bn from N104.9bn and its operating result to a profit of N1.4bn from a loss of N11.2bn. This more than compensated for weaker figures from the Nigerian Petroleum Development Company (NDPC) as well slightly worse numbers from the three refining companies.
These are acceptable results in the adverse circumstances, the worst of which was the shut-in of more than 300,000 b/d from February from the sabotage of the Forcados terminal export line. Additionally, the commentary notes the impact of vandalism on the Bonny, Usan and Que Ibo terminals. It puts average crude production at just 1.65 mbpd in September.
We can see the cost of sabotage another way. In September output under production sharing contracts amounted to 27.7m barrels, compared with 27.8m barrels in October 2015. Over the same period, output from the corporation’s joint ventures, under alternative financing arrangements and from the NPDC declined by 9.7m barrels, 6.1m barrels and 1.9m barrels respectively.
The January-October operating deficit of N162bn compares with N241bn in the same period of 2015. Cost control has been critical but we repeat our point that the corporation cannot become the policeman in the Niger Delta.
Sources: NNPC, Financial and Operations Report, July 2016; FBNQuest Research
Over the 12 months to October, export receipts from crude oil and gas sales totaled US$2.66bn. Other than token payments of US$73m to the federation account, the amount was paid in full towards joint-venture (jv) cash calls to the IOCs. These payments were still heavily in arrears.