- NNPC HQ Targeted N912m, Posted zero Revenue in October
The corporate headquarters of the Nigerian National Petroleum Corporation did not generate any revenue in October 2016 and failed to contribute any amount to the group purse for the month.
The latest monthly NNPC Group Financial Report obtained in Abuja on Friday showed that the national oil firm’s headquarters failed to generate revenue despite targeting a revenue generation of N912m for the month in review.
The CHQ had in September 2016 generated N4.14m, recorded an expenditure of N13.333bn and posted a total deficit of N13.329bn.
It, however, could not sustain that tempo of income generation in October, as it posted zero revenue in the review month, incurred an expense of N14.84bn and recorded a total deficit of N14.84bn.
A further analysis of the report, however, showed that the NNPC as a group reduced its total losses from N17.18bn in September to N16.85bn in October, while its deficit for the 10-month period beginning from January this year was put at N161.76bn.
The national oil firm stated that it had been operating in a challenging environment which limited its aspiration to make profit.
It explained that the marginal improvement in its trading deficit between September and October was due to improved petroleum products sales and enhanced cost control across the group.
“Factors that still drag the NNPC performances include the force majeure declared by the SPDC as a result of vandalised 48-inch Forcados export line,” it added.
In their review of the corporation’s performance, analysts at FBN Capital Research stated that the NNPC results were again hamstrung by sabotage.
They highlighted the fact that the corporation’s accounts for October showed a group operating deficit of N16.9bn, which was slightly lower than the N17.2bn recorded in the previous month.
They said, “The driver was an improved performance from the Pipeline and Products Marketing Company, which boosted its sales to N112bn from N104.9bn and its operating result to a profit of N1.4bn from a loss of N11.2bn. This more than compensated for weaker figures from the Nigerian Petroleum Development Company as well slightly worse numbers from the three refining companies.”
FBN Capital, however, observed that those were acceptable results in the adverse circumstances, adding that the worst of which was the shut-in of more than 300,000 barrels per day from February as a result of the sabotage of the Forcados terminal export line.
They further noted that the impact of vandalism was felt on the Bonny, Usan and Que Ibo terminals, a development that led to an average crude production of 1.65 million barrels per day in September.
The analysts said, “We can see the cost of sabotage another way. In September, output under production sharing contracts amounted to 27.7 million barrels, compared with 27.8 million barrels in October 2015.
“Over the same period, output from the corporation’s joint ventures, under alternative financing arrangements and from the NPDC declined by 9.7 million barrels, 6.1 million barrels and 1.9 million barrels, respectively.
“The January-October operating deficit of N162bn compares with N241bn in the same period of 2015. Cost control has been critical but we repeat our point that the corporation cannot become the police in the Niger Delta.”
Crude Oil Rises to $43.68 on Monday Despite Concerns Over Rising COVID-19 Cases
Oil Rises to $43.68 Despite Concerns Over Rising COVID-19 Cases
Oil prices rose on Monday during the London trading session to $43.68 per barrel despite growing concerns over the rising number of new COVID-19 cases.
The Brent Crude oil, against which Nigerian crude oil is measured, rose as high as $43.68 per barrel before slightly pulling back to $43.24 per barrel as at 1:25 pm Nigerian time.
Despite the rising number of COVID-19 new cases in the US and the rest of the world, Brent crude oil has been able to sustain the recent upsurge on the back of OPEC and allies 9.7 million per day production cut agreement and the reported improvement in compliance level.
However, experts have said if the number of confirmed COVID-19 cases continues to increase that demand for the commodity will decline as people and businesses would be forced to shut down operations and stay at home.
“There will be some kind of decline in demand if cases were to increase as people will stay at home,” said Howie Lee, an economist at Singapore’s OCBC Bank. “The pace of U.S. demand recovery will not be as steep as expected.”
Analysts at ING bank said in a note that the report of the Energy Information Administration due later this week will highlight the impact of the new restriction due to the second wave of COVID-19 on gasoline demand.
“We will get a better idea of what impact tighter restrictions in several states have had on gasoline demand with the EIA (Energy Information Administration) report this week.”
Citigroup Sees $60 Per Barrel Crude Oil in the Next 12 Months
Citigroup Says Crude Oil Will Reach $60 Per Barrel in a year
Despite the current economic downturn and the projected second phase of COVID-19, Citigroup, a New-York based financial service company, has said oil price could hit $60 per barrel in the next 12 months.
Citigroup disclosed this on Thursday during a virtual EMEA Media Summit titled – ‘Navigating the Future: What’s Next in a Post-COVID-19 World’.
“After a substantial underperformance in the last six months relative to several other commodities, crude will eventually bounce back to around $60 per barrel over the next 12 months,” Max Layton, European Head of Commodities Strategy, Citigroup said while giving a presentation on the outlook for commodities in the second half of 2020, and into 2021.
This means Brent crude oil would rise by at least 50 percent from the current level of $42 per barrel in the next 12 months.
“It’s going to be a function of the demand and supply but recently we have been seeing a spike in the demand for some of the commodities,” said Atiq Rehman, Head of EMEA Emerging Markets, Citigroup.
“A lot of these economies are heavily commodity-dependent, and perhaps, in the past have been guilty of not diversifying when they come under pressure. I think perhaps, this recent moves will push them to diversify away from simply commodities,” Grant Carson, Head of TRUK And Non-Presence Countries, Citigroup, stated citing Russian as one of the countries that have recorded success in diversifying away from crude oil.
Oil Sustains $42 Price Level as OPEC Output Drops to Over Two-Decade Low
OPEC Oil Output Drops to Over Two-Decade Low in June
Crude oil sustained $42 per barrel price level following a recent survey conducted by Reuters that showed the Organisation for the Petroleum Exporting Countries (OPEC) managed to cut oil production to over two-decade low in the month of June.
According to the survey, OPEC’s 13 members pumped 22.62 million barrels per day in June, 1.92 million barrels per day below May’s revised figure. The lowest since May 1991.
OPEC and allies, together referred to as OPEC plus, had agreed to cut oil production by 9.7 million barrels per day in the month of April to rebalance the global oil market and prop up prices amid COVID-19 pandemic.
OPEC’s share of the 9.7 million barrels per day production cut was 6.084 million bpd but OPEC delivered 6.523 million bpd cut in the month of June despite the inconsistencies from Nigeria, Angola and Iraq.
In June, Saudi Arabia reduced production by 1.13 million barrels per day to 7.53 million bpd. While Kuwait and the United Arab Emirates met their quota but struggle to fulfill the extra cuts.
Nigeria, Iraq and Angola continue to struggle in the month of June. However, their performance improved compared to May as Nigeria attained 77 percent compliance level, up from 19 percent in May.
While Iraq and Angola achieved 70 percent and 80 percent compliance level, respectively. Nigeria and Iraq have pledged to cut more in July despite their economic challenges. Angola, however, said it would not be able to cut extra oil production until October.
Brent crude oil, against which Nigerian oil is measured, rose to $42.48 per barrel on Friday as at 2:58 pm Nigerian time.
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