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Despite Global Crude Oil Price Recovery, NNPC Revenue Declined by 27.02% In the First 5-Months of 2021

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NNPC

The Nigerian National Petroleum Corporation (NNPC) revenue declined 27.02 percent to N1.08 trillion in the first five months of 2021 compared with N1.48 trillion revenues earned in the corresponding period of last year.

According to a Federation Account Allocation Committee (FAAC) document, the state-owned oil firm earning declined by N396.8 billion in the period despite global crude oil price recovery.

The document also showed that the corporation failed to meet its monthly funding obligation of N414.94 billion for its projects and operations for the period.

Whereas the NNPC has a total revenue projection of N4.97 trillion for 2021, sub-divided into N414.941 billion per month, the document showed that in January, it raked in gross revenue of N195.624 billion and N191.194 billion in February.

In March, the NNPC’s total revenue stood at N224.589 billion and was N156.366 billion in April, while in May, the corporation grossed a revenue of N320.315 billion to hit N1.088 trillion.

In comparison, for the same period in 2020, gross revenue, which is a summation of receipts from Joint Venture (JV) crude oil, JV gas, Production Sharing Contracts (PSC) and miscellaneous sources stood at N380 billion in January.

The revenue in February was N264.1 billion, in March, it was N324.4 billion, it was N298.1 billion in April and it stood at N219.3 billion in May.

However, the corporation resumed the monthly funding for its frontier exploration services which did not receive any budget in April, but gulped N3.22 billion in May, having received N1.96 billion in January, N1.92 billion in February and N2.255 billion in March.

The NNPC is currently performing exploration and drilling activities of Kolmani River 3, had reported earlier that the first appraisal, Kolmani River 2, in the Gongola Basin, encountered both oil, condensate and gas, which it said were significant finds.

The corporation is also carrying out exploration activities in the Chad Basin further northwards but had to halt its seismic operations after insurgents attacked and killed the technical workers and some security forces.

Although financing of frontier exploration basins is currently at the discretion of the corporation, the new Petroleum Industry Bill (PIB), if assented to by President Muhammadu Buhari as it currently exists will make it mandatory for the NNPC to deploy 30 percent from proceeds of its production sharing, profit sharing and risk service contracts to fund exploration of the basins.

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Crude Oil

Oil Prices Hit Multi-year Highs on Monday

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Crude oil - Investors King

Oil prices hit multi-year highs on Monday buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.

Brent crude oil futures were up 59 cents, or 0.7%, to $85.45 a barrel by 0900 GMT, after hitting $86.04, their highest level since October 2018.

U.S. West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.1%, to $83.18 a barrel, after hitting a $83.73, their highest since October 2014.

Both contracts rose by at least 3% last week.

“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ bank said in a note, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

“The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder,” he said.

“As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he said.

Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging energy costs on industry.

Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks.

China’s daily crude processing rate in September also fell its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas.

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Crude Oil

Oil and Gas Companies in Nigeria

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Oil - Investors King

Nigeria is an oil reach nation with several oil and gas companies operating in Africa’s largest economy.  However, only ten oil and gas companies are listed on the Nigerian Exchange Limited (NGX).

Before we discuss in detail each of the listed oil and gas companies in Nigeria. A short background on Africa’s largest economy will help throw more light on the significance of the oil and gas companies or the entire oil sector to the Nigerian economy.

Nigeria is a petrol-dollar economy, which means Africa’s most populous nation, sells crude oil and use its proceed to service the economy. In fact, the Nigerian Naira is backed by crude oil like Canadian Dollar and other commodity-dependent economies.

But because the Central Bank of Nigeria (CBN) pegged the Naira against its global counterparts, the local currency does not reflect succinctly the fluctuation in global oil prices like other crude oil-dependent currencies.

Since global oil prices rebounded with the gradual reopening of economies, the oil and gas companies in Nigeria have also rebounded from the 2020 record low of $15 per barrel. The oil and gas sector has gained 62.76 percent from the year to date, according to the NGX Oil and Gas Index.

The index gauge price movements in 10 listed oil and gas companies in Nigeria.  However, there are several oil and gas companies in Nigeria not listed on the Nigerian Exchange Limited.

Oil and Gas Companies Listed on the Nigerian Exchange Limited (NGX)

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Oil Prices Extend Gains on Friday After Saudis Dismiss Supply Concerns

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Oil

Oil prices extended gains on Friday after Prince Abdulaziz bin Salman, Saudi Energy Minister dismissed calls for more crude oil supply on Thursday.

Brent crude oil, against which Nigerian oil is priced, rose to $84.92 per barrel at around 8:31 am Nigerian time. The U.S West Texas Intermediate crude oil also responded positively to the comment, rising to $81.56 per barrel on Friday.

Prince Abdulaziz had stated on Thursday that OPEC plus efforts were enough to protect the oil market from wild price volatility seen in coal and natural gas markets.

“What we see in the oil market today is an incremental (price) increase of 29%, vis-à-vis 500% increases in (natural) gas prices, 300% increases in coal prices, 200% increases in NGLs (natural gas liquids) ….”

He further stated that the Organization of the Petroleum Exporting Countries and allies led by Russia, have done a “remarkable” job acting as “so-called regulator of the oil market,” he said.

“Gas markets, coal markets, other sources of energy need a regulator. This situation is telling us that people need to copy and paste what OPEC+ has done and what it has achieved.”

Prince Abdulaziz explained that OPEC plus will add 400,000 barrels per day in November and do the same in December and subsequent months. The increase will be gradual he said.

“We want to make sure that we reduce those excess capacities that we have developed as a result of COVID,” he said, adding that OPEC+ wanted to do it “in a gradual, phased-in approach”.

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