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Federation Earned $61.2bn from 1.28bn Barrels of Oil in 21 Months

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Crude oil gains
  • Federation Earned $61.2bn from 1.28bn Barrels of Oil in 21 Months

The Nigeria Extractive Industries Transparency Initiative (NEITI) has put Nigeria’s aggregate crude oil production and earnings within the last 21 months when the Nigerian National Petroleum Corporation (NNPC) began to publish its monthly production and financial records, at 1.28 billion barrels and $61.17 billion, respectively.

NEITI said it used the aggregates from NNPC’s monthly production and financial records for the period to arrive at the 1.28 billion barrels of crude oil that was produced, of which the international oil companies (IOCs) and independents lifted 809.98 million barrels, the federal government lifted 441.37 million barrels while alternative financing (AFs) arrangements lifted 30.15 million barrels.

It said in a summary on its latest accountability publication titled: “Occasional Paper Series, A Review of NNPC’s Financial and Operational Reports;” released yesterday in Abuja that of the $61.17 billion that accrued as revenue over the 21-month period, the government, IOCs, independents and AFs earned $20.9 billion, $38.78 billion and $1.5 billion, respectively.

The NEITI publication was produced with BudgIT, a leading Nigerian technology-driven, civic-advocacy group on budget and public finance issues.

NEITI further stated that NNPC recorded a trading deficit of N418.97 billion in 19 months, and profit of N7.87 billion in only two months.

It said crude oil production and financial data publicly disclosed by NNPC over the 21-month period, starting from January 2015 to September 2016, showed that only 9.74 per cent of the crude lifted by NNPC for domestic crude was delivered to the refineries.

It explained that crude oil production fluctuated in the period under review, with the highest production per month recorded in October 2015 (69.49 million barrels) and the lowest recorded in August 2016 (46.56 million barrels).

“When the production figures for January 2015 (68.07 million barrels) and September 2016 (49.53 million barrels) are compared, there was a decline in monthly production by 27.23 per cent.

“The same trend was noticeable in terms of average daily production per quarter, as 2.16 million barrels were produced daily on the average in the first quarter of 2015 as against the 1.60 million barrels average daily production per quarter in the third quarter of 2016,” it added.

It noted that the fall in oil production was largely attributed to growing vandalism and militancy in the Niger Delta region. However, production fluctuations were noticeable even before the outset of militant activities, NEITI added.

On NNPC’s profit and loss account, the report stated: “For the 21 months under review, the NNPC group made a cumulative loss of N418.97 billion in 19 months. Volatility was also noticeable in the group’s losses, ranging from N3.55 billion in January 2016 to N45.49 billion in September 2015.

“The group made a profit only in two of the 21 months covered by the NNPC monthly reports under review. This was in January 2015 when the group made a profit of N7.6 billion and in May 2016 when it made a profit of N0.27 billion, with total profits in 21 months coming to N7.87 billion, as against the loss of N418.97 billion, with the net loss coming to N411.1 billion.”

NEITI explained that between January 2015 and September 2016, the average capacity utilisation of Nigeria’s refineries in Port Harcourt, Warri and Kaduna was 8.55 per cent, adding: “The refineries did not process crude oil at all in seven out of the 21 months under review.”

It said the Kaduna refinery was the poorest performer while the Port Harcourt refinery was the best performer.

NEITI’s Executive Secretary, Waziri Adio, however, said in his reaction to the data that the NNPC has with the monthly reports voluntarily embraced transparency, a virtue he said was critical to the efficiency of the country’s oil industry.

Adio said: “What NNPC has done with its monthly reports could be termed a sea-change. From being the poster boy for opacity, NNPC is voluntarily embracing openness and providing near real-time information about the state of play of our oil and gas sector today.

“This is commendable, but also deserving of close and critical examination.

For example, what do the reports, looked at together, tell us about our petroleum sector today and what is the implication of that for the public, for public finance and for petroleum sector reforms? That is the rationale for this special report.”

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.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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OPEC Says Uncertainties Remain High in 2021

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OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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