NNPC lists petroleum industry’s challenges

Loses N345.7 billion in 2015 alone

The Nigerian National Petroleum Corporation (NNPC) has listed the challenges confronting the corporation to include assets integrity issues, crude oil and product theft; sub-commercial contracts; low capacity utilisation of refineries; issues of subsidy management; and inefficient business model.

Specifically, the corporation lost N345.7 billion to pipeline repairs and associated costs; crude oil and product theft/losses and unrealised subsidy claims in 2015 alone.

The corporation said in its January to August report of the country’s petroleum sector obtained by The Guardian on Monday, that incessant pipelines breakages nationwide has led to massive leakages and huge accounting losses to NNPC.

It disclosed that pipeline repairs and other associated cost accounted for about N69.4 billion in 2015 alone.

It noted that about N45.8 billion was recorded as crude oil and product theft and losses for 2015 resulting from vandalized pipelines. “About 1,824 pipeline breaks recorded by Petroleum Product Marketing Company (PPMC) in 2015 so far.

NNPC said that poorly negotiated legacy contracts have contributed adversely to the profitability of the corporation.

It added that low capacity utilization of refineries was largely due to refinery asset integrity issues and lack of crude oil feed due to vandalized pipelines.

NNPC added that unrealized subsidy claims of about N231 billion for 2015 alone was responsible for over 61 per cent of the deficit recorded by the corporation.

It stated: “Some of the corporation’s business units are not operating the most efficient business models th at will position the company for profitability. Consequently, NNPC is embarking on a change agenda termed the “20 Fixes” which identifies 20 critical issues that need to be addressed in order to re-position the corporation on the path of profitability”.

The corporation disclosed that a total of 67.49 million barrels of crude oil and condensate was produced for the month of July 2015 translating to an average daily production of 2.177 million barrels.

It added a total of 445 million barrels was produced from January to July 2015 representing an average daily production of 2.099 million barrels for the same period. Production from Joint Ventures (JVs) and Production sharing contracts (PSC) contributed about 31.5 per cent and 42 per cent respectively to the total production.

Dwelling on gas production, the report said that a total amount of 225 billion standard cubic feet (BCF) of natural gas was produced for the month of July 2015 translating to an average daily production of 8,233 million standard cubic feet per day (mmscfd).

“ For the period January to July 2015, a total of 1,677 BCF of gas was produced representing an average daily production of 7,908 mmscfd for the same period. Production from JVs and PSC contributed about 69.6 per cent and 22 per cent respectively to the total national gas production”, it added.

NNPC disclosed that a total volume of 63.7 million barrels of crude oil and condensate was lifted in the month of July 2015 by all parties.

It noted that out of this volume, 25.2mb was lifted for and on behalf of the Federal Government of Nigeria comprising of 17.4 million barrels lifted on the account of NNPC and 7.8 million barrels lifted on the account of FIRS.

“The 17.4 million barrels lifted on the account of NNPC in July comprises of 15.4 and 1.9 million barrels for the domestic and export markets respectively.

“At an average oil price of $51.97/bbl and exchange rate of N195.95/$, the domestic crude oil lifted by NNPC is valued at $805,220,701 or a naira equivalent of N157, 782,872,917 for the period. The remaining crude oil lifted for export was valued at $108,916,802.23 at an average price of $56.76/barrel.

“The total value of crude oil lifted on the account of NNPC in July was thus $914,136,873. For the period from January to July 2015, a total volume of 439 million barrels of crude oil and condensate was lifted by all parties”, it added.

The corporation said that it lifted 15,493,685 barrels of Crude Oil for domestic utilization translating to an average volume of 499,767 barrels of oil per day in July.

NNPC said that in order to meet domestic product supply requirement for the month of July 2015, 8,731,917 barrels of crude oil was processed through Offshore Processing Agreements (OPA), 3,345,992 barrels was processed in the domestic refineries and the balance of 3,415,776 barrels was sold in the export market”.