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NNPC May Adjust Petrol Pump Price on Falling Cargo Rates

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  • NNPC May Adjust Petrol Pump Price on Falling Cargo Rates

The Nigerian National Petroleum Corporation (NNPC) may undertake a downward review of the pump price of petrol in its retail outlets across the country.

The paper yesterday gathered from an authoritative source within the corporation in Abuja that this was possible from a reported consistent drop in the historical price of petroleum cargoes from about $600 per metric tonne to an average of $440 per metric tonne.

NNPC had recently adjusted the pump price of petrol at its outlets, thus raising fears of a possible hike. The development also followed claims in August by its former Group Managing Directors that the government’s pricing modulation framework was not economical for the downstream petroleum business.

The source however stated that the cargo price is one of the key elements often considered by the Petroleum Products Pricing and Regulatory Agency (PPPRA) in its calculation of the template for petrol pump price.

This, he noted, has been on the downward trend and could necessitate the corporation reviewing its pump price to reflect the market realities. The other key element being the foreign exchange has been left floating by the Central Bank of Nigeria (CBN).

He also explained that the corporation has spent a lot of energies securing its petrol supplies and distribution networks to keep the country from what he described as system sabotage during the yuletide season by some marketers.

“One of the things we wanted to achieve is to ensure that we do not have queues in this time of the year and a lot of the energies have been spent on securing that. If you look at the market trend at the moment, we have been fortunate. Historically, it is this time of the year that cargo prices are about $500 to $600 per metric tonne, and this is one of the two key elements on the PPPRA templates that nobody controls – it is down to market forces,” he said.

According to him, “The cargo price is usually between $500 and $600 per metric tonne, but this year, we have even had cargoes for $440. The pricing has been good. Our network is a mix of the NNPC and others, because of the open market forex policy, the cost of doing business for others is higher.

What NNPC retail has done is to adjust the price to accommodate the additional expense of doing business around this time of the year.

“The N145 per litre is not just the margin but includes freights and all sorts of other expenses; we did that to accommodate the expenses and as we get cheaper and cheaper cargoes, we will adjust our prices in accordance.”

Meanwhile, the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) has said about 50 million standard feet per day (mscuf/d) of gas which translates to $120 million revenue potential and 150 to 200 megawatts (MW) of power is being flared at oil fields in Nigeria.

A representative of the OPTS at the recent consultative session for the draft National Gas Policy, Mr. James Ajaifi disclosed this during a panel discussion on the policy. OPTS is the sectoral group for local and foreign-owned companies registered in Nigeria and holding an oil prospecting or oil mining licence.

The group said the government would have to address the issues of gas flaring in the policy document to enable the country maximise its gas resources for development.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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NNPC Plans Divestment Pathway For Joint Ventures Partnership

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The Nigerian National Petroleum Corporation (NNPC) has said it would outline policies to guide its joint venture partners (JVC) that wish to divest from joint ventures or the Nigerian oil and gas industry.

NNPC Group Managing Director, Mele Kyari on Monday said that Nigeria, as a key player in global energy security, was addressing its challenges, mainly fiscal, security and cost competitiveness, to stimulate investments in the oil and gas industry.

Kyari, who spoke in Lagos while delivering an address at the opening ceremony of the Nigeria Annual International Conference and Exhibition said, “NNPC, as a national oil company, is leading multiple initiatives to address this and other issues.

“As we celebrate the passage of the PIB, we have moved our focus to improve security architecture through collaboration with major stakeholders.”

According to him, the Nigerian Upstream Cost Optimisation Programme is working with operators and service contractors to challenge the cost of operations and increase profitability and growth in the industry.

“On the other hand, we are seeing a wave of divestment by oil majors operating in Nigeria. NNPC as a national oil company cannot stop partners from divesting their interest, even though it creates challenges for us in ensuring that we get the right and competent investors to take a position and add value to the assets.

“The NNPC will ensure that Nigeria’s national strategic interest is safeguarded by developing a comprehensive divestment policy that will provide clear guidelines and criteria for divestment of partners’ interest,” Kyari said.

He said the corporation would make clear distinctions between divestment of shares and operatorship agreements under various joint operating agreements while leveraging its rights of pre-emption and evaluating the operational competence and tract records of new partners.

Kyari said in order to sustain a prosperous business environment, particular attention would be paid to abandonment and relinquishment costs, severance of operator staff, third party contract liabilities, competency of the buyer, and post purchased technical, operational and financial capabilities.

He said the NNPC would declare its first dividend to Nigerians as it prepares to release its 2020 financial statements in the third quarter of this year.

The local unit of the Royal Dutch Shell had in May said that its onshore oil portfolio in Nigeria was ‘no longer compatible with its strategic ambitions.

“We have reduced the total number of licenses in onshore Nigeria by half. But unfortunately, our remaining onshore operations continue to be subject to sabotage and theft,” Chief Executive Officer, Ben van Beurden, told investors at the company’s AGM.

Early this year, Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited concluded the sale of their combined 45 percent interest in Oil Mining Lease 17 and related assets in the Eastern Niger Delta to TNOG Oil and Gas Limited.

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Petrol Subsidy Likely to Gulp N2T This Year –Rainoil GMD

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Nigeria may end up spending N2 trillion on petrol subsidy this year if the current situation persists, the Group Managing Director, Rainoil Limited, Dr Gabriel Ogbechie, has said.

Ogbechie said this on Sunday at the Nigeria History Series of the Centre for Values in Leadership, themed ‘Indigenous participation in the downstream oil and gas sector’ moderated by Prof. Pat Utomi.

While lamenting the lack of deregulation in the downstream sector, he said the government was spending about N8m daily on petrol subsidy.

He described the sector as highly regulated, saying, “I wonder if there is any other sector of the economy that is as regulated as the downstream.”

He said, “The biggest elephant in the room today as far as the downstream is concerned is the failure, so to speak, of the government to deregulate the downstream – fixing the price at which petroleum products are sold, I believe, is very seriously harmful to this economy.”

According to him, the landing cost of the petrol imported into the country is about N300 per litre, based on the current naira-dollar exchange rate.

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Sirius Petroleum and Baker Hughes Collaborate on OML 65 Drilling in Nigeria

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Sirius Petroleum, the Africa-focused oil and gas production and development company, has signed a memorandum of understanding with Baker Hughes. The MoU names Baker Hughes as the approved service provider for Phase 1 of the Approved Work Program (AWP) of the OML 65 permit, a large onshore block in the western Niger Delta, Nigeria. Baker Hughes will provide a range of drilling and related services at a mutually agreed upon pricing structure to deliver the initial nine-well program.

Sirius has signed various legal agreements with COPDC, a Nigerian joint venture, to implement this program. COPDC has signed a Financial and Technical Services Agreement (FTSA) with the Nigerian Petroleum Development Company (NPDC) for the development and production of petroleum reserves and resources on OML 65. The FTSA includes an AWP which provides for development in three phases of the block. and Sirius has entered into an agreement with the joint venture to provide financing and technical services for the execution of the PTA.

The joint venture will initially focus on the redevelopment of the Abura field, involving the drilling and completion of up to nine development wells, intended to produce the remaining 2P reserves of 16.2 Mbbl, as certified by Gaffney Cline and Associates (GCA) in a CPR dated June 2021.

Commenting, Toks Azeez, Sales & Commercial Executive of Baker Hughes, said: “We are extremely happy to have been selected for this project with Sirius and their JV partners. This project represents an important step towards providing our world-class integrated well-service solutions in one of the most prolific fields in the Niger Delta. Baker Hughes’ technological efficiency and execution excellence will help Sirius improve its profitability and competitiveness in the energy market.”

Bobo Kuti, CEO of Sirius, commented: “We are delighted to have secured the services of one of the world’s leading energy technology companies to work with our joint venture team to deliver the approved work program on the block. OML 65. We look forward to building a long and mutually beneficial partnership with Baker Hughes.”

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