A Woeful Performance from the Refineries

Oil & Gas
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Tuesday, October 17, 2017 9:19AM/ FBNQuest Research

In July the NNPC’s operating deficit doubled from N5.2bn the previous month to N11.9bn (US$39m). A profit before central costs and ventures from production (N15.4bn) was inadequate to cover losses from refineries (N8.5bn) and retail/marketing (N7.2bn). The corporation’s Financial and Operations Report for July notes a pick-up in crude output (including condensates) in June to 1.95 mbpd from 1.88 mbpd the previous month. It attributes this latest increase to the FGN’s engagement with stakeholders in the delta and the resumption of exports from the Forcados terminal. 

The refineries moved into loss in July because of familiar production shutdowns. Port Harcourt processed 215,000 metric tonnes (MT) of crude in July, Warri 10,000 MT and Kaduna none. 

The report says that the corporation again ensured availability of petroleum products across the country. In July 1.17bn litres of premium motor spirit were imported, 48 million litres refined domestically, and 1.00bn litres distributed and sold by the Pipelines and Products Marketing Company (PPMC). 

The deficit has declined to N60bn in January-July 2017 from N116bn in the year-earlier period. Without a legal framework for the industry and root-and-branch change at the refineries, further upside is limited. In the period sizeable operating surpluses were reported by the Nigerian Petroleum Development Company (N44bn), the Nigerian Gas Processing and Transportation Company (N34bn) and the Port Harcourt Refining Company (N28bn). 

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The commentary notes that power plants generated 2,655 megawatts in July from gas supplied by the corporation, equivalent to 77% of total generation. 

Our note would not be complete if we did not mention the territorial differences that have emerged between the corporation and the FGN.  

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