No recovery in oil output

Oil & Gas
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Friday, June 19, 2015 9:32AM / FBN Capital Research   

The CBN’s Economic Report for April discloses that Nigeria’s oil output (including condensates and NGLs) increased by 5% to 1.91 million barrels per day (mbpd) from 1.82mbpd in March.

We note, however, a possible statistical anomaly: the data through to December 2014 is drawn by the CBN from the NNPC and Reuters, while that for the four following months are published in its monthly report without a source given.


The report maintains the party line that 450,000bpd is processed domestically by the NNPC. It is common knowledge that the refineries produce at a fraction of installed capacity and that domestic demand is largely met by imports, which have fallen since the end of April and created the prevailing fuel scarcity.

Pipeline vandalism continues to put a strain on the country’s output capacity. Based on estimates by PENGASSAN (industry trades union), Nigeria loses between US$15m to US$25m per day as a result. The upper level of the range suggests losses still close to 400,000bpd.

There is also the issue of accountability since there is no harmonised metering of production. Our understanding is that there is metering at the export terminals by several agencies using different methods.

For the budget impact we note that gross oil receipts in the federation account under the review period totalled N286bn, declining by 28% from N365bn recorded in the preceding month.

The petroleum industry bill (PIB) was passed by the House of Representatives of the last (seventh) assembly but not by the upper house (Senate). The onus for its passage therefore falls upon the eighth assembly. We note comments from the president’s circle that it could work first on the structure of the industry, and thereafter on its fiscal regime.

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