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Renewed Oil Search Pushes NNPC’s Deficits to N19bn

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  • Renewed Oil Search Pushes NNPC’s Deficits to N19bn

The renewed search for crude oil in the frontier inland basins has started impacting the monthly trading financials of the Nigerian National Petroleum Corporation (NNPC), its monthly financial and operations report for November 2016 has disclosed.

Specifically, as a result of the fresh oil search activities, the NNPC, in November, incurred additional cost of N1.87 billion over the October figures, pushing the deficits in the review month to N18.72 billion.

The monthly report, released last week in Abuja, stated that Integrated Data Services Limited (IDSL), NNPC’s subsidiary, which is in charge of hydrocarbon exploration services and provision of seismic data acquisition, has witnessed an increase in its operating costs, following oil search activities in the frontier basins.

The report stated that despite an improved revenue generation profile, upholding its oil finds in the frontier basins contributed to the deficits recorded by the NNPC in the month.

According to the report, “The corporation has been operating in challenging situations which limits its aspiration to profitability. This 16th publication of NNPC monthly financial and operations report indicates a trading deficit of N18.72 billion. This represents an increase of N1.87 billion in trading deficit as against October, 2016.”

It explained that, “The marginal increase in the trading deficit was due to an upsurge in IDSL operating costs attributed to the on-going mobilisation activities in both Benue Trough seismic data project located in Bauchi and Party 05 in Elele, Rivers state, despite an improved revenue generation.”

Apart from the oil finds, NNPC, however, added that there were other activities that contributed to its deficit business closure in November.
“The strike action by Bristow Helicopters workers delayed the planned lay-time of Okono Blend resulting to nil NPDC offshore export sales for the month. Other factors that pulled down NNPC’s performance include force majeure declared by SPDC (Shell Petroleum Development Company) as a result of the vandalised 48inch Forcados export line after the restoration on 17th October, 2016 amongst others,” it stated.

While the Federal Government in 2016 renewed its desire to grow Nigeria’s oil reserves with exploration in the Chad Basin, and Benue Trough, the IDSL, which undertakes seismic data procession and interpretation, as well as reservoir management services in Nigeria’s oil and gas industry, was awarded the job to acquire over 500 square kilometers of 3D seismic data acquisition in the first instance from the basins.

NNPC also stated that it was collaborating with the Republic of Niger to share geological data that could boost its ongoing exploratory activities in the Chad Basin and Benue Trough.

It disclosed that it was in discussion with the Chinese company that is operating the Agadem, Niger Republic oil field for the construction of an over 1, 000 kilometres alternative crude oil supply pipeline to its Kaduna Refinery.

Past reports on Nigeria’s oil exploration in the frontier basins indicated that between 1977 and 1996, the NNPC commenced exploration activities in the Chad Basin during which 23 wells were drilled and only two wells – Wadi-1 and Kinasar-1, recorded non-commercial gas discoveries before exploration was suspended in the Chad Basin in 2000 for lack of commercial finds.

Similarly on the Gongola Basin, the government had between 1993 and 2000 awarded blocks in the basin to Chevron, Total and Shell Nigeria Exploration and Production Company (SNEPCo), and they reportedly acquired 3,153km of 2D seismic data, drilled one well each and made a non-commercial gas discovery in one of the wells – Kolmani River-1, before they suspended operations and abandoned the blocks.

Meanwhile, the corporation also gave an update on the operations of some of the country’s crude oil lifting terminals that have been impacted by acts of vandalism in the Niger Delta region. It said both Brass and Forcados were still shut.

“Forcados terminal; a force majeure declared since 15th February, 2016 was still in place in October 2016 due to the damage on the 48” sub-sea export which triggered a disruption in cargo lifting. The force majeure is still in place pending repairs of the line and stable/uninterrupted crude oil production

“Brass terminal; the force majeure declared on 22nd May, 2016 was still in place in October 2016 as a result of the sabotage on the Clough Creek-Tebidaba pipeline. Some wells were shut down from 1st to 31stOctober, 2016 for maintenance of critical equipment. A total of about 95,000bopd was shut in throughout the month of October 2016,” it explained in the monthly report.

In another development, NNPC has said 50 companies submitted bids to provide sea-worthy tug boats on charter basis for its maritime operational requirements in Lagos, Warri and Port Harcourt.

A statement from its Group General Manager, Public Affairs, Ndu Ughamadu, in Abuja explained that the public bid opening was held at the corporation’s headquarters, and had in attendance representatives of the bidding companies with officials of the Bureau of Public Procurement (BPP), Department of Petroleum Resources (DPR), Nigerian Extractive Industries Transparency Initiative (NEITI), Nigerian Content Development and Monitoring Board (NCDMB), and some members of the civil society organisations as observers.

Though the statement did not disclose the corporate identities of the 50 firms or the number of them that would be selected for the term contract, it however said the successful companies would be engaged on a two-year term contract in the first instance, with an option of renewal for a further one year.

Winners, it noted, were expected to provide services, which include aiding the berth and un-berth of all ships operating at the NNPC jetties/buoy, logistics support for safe ship-to-ship operations, which covers movement of fenders, horses, documents, rigging and unrigging of fenders, among others.

The statement also quoted the corporation’s Group General Manager, Supply Chain Management, Mr. Shehu Liman, to have said at the bid opening that the NNPC under Dr. Maikanti Baru was determined to instill and sustain the values of transparency, accountability and integrity in all its procurement process.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns

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Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.

Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.

The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.

This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.

While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.

Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.

Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.

Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.

Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.

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Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm

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Dangote Refinery

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.

Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.

The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.

However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.

Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.

He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.

Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.

The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.

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Energy

NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade

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Mele Kyari - Investors King

The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.

Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.

Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.

In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.

Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.

He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.

Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.

In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.

Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.

The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.

As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.

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