55% of Total Domestic Crude Oil supply in April 2016 was via Direct Sales Direct Purchase Agreement

Oil & Gas
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Wednesday, June 08, 2016 5:04PM /NNPC

Introduction
Global Crude Oil Spot Prices increased by $3.41 per barrel in April, 2016 to a monthly average of $40.75 per barrel, up from $37.34 in March 2016 and down from $57.54 in April 2015 (one year ago). This represents an increase of 9.13% from March 2016 and - 29.18% from April 2015, one year ago.

The increase in the crude oil spot prices by $3.41 per barrel in April 2016 to a monthly average of $40.75 per barrel was the highest monthly average so far this year. Several factors put upward pressure on crude oil prices in April 2016 which include improving economic data and related indications that global oil demand growth is accelerating, ongoing declines in the U.S. rig count and crude oil production, and growing oil supply outages.


Nigerian Crude Oil production for the month of March 2016 stood at 57.43 Million Barrels which is 3.10% lower than February, 2016 production and so far the lowest recorded in the 12 months review period. Recent upsurge in vandalism has negatively impacted on the Nigerian crude oil production output, losing its African top Crude Oil producer to Angola. About 380,000bopd remained shut-in due to vandalism of the 48” sub-sea export line on 15th February, 2016.

Hence, all March Cargoes were deferred until the repair is completed. Also the nation has lost over 1,500 megawatts of power supply to the damage as gas supply from Forcados, which is Nigeria’s major artery, accounts for 40-50 percent of gas production. Incessant pipeline vandalism poses the greatest threat to the industry.

In the downstream sector, fuel scarcity lingers into this period despite ramp-up of Petroleum supply and distribution to all states to ensure product availability in the Country. Local refining capacity has remained below commercial threshold due to prolonged Turn Around Maintenance (TAM) issues, pipeline vandalism and resultant losses. In the same vein, Forex challenges have also impeded products importation which affects the set objective of the Corporation.

This ninth publication of NNPC monthly financial and operations report indicate an operational loss of ₦19.43billion in April 2016 as against ₦18.89 billion in the month of March 2016. The deficit increased by 2.83% in the month of April 2016 due to slight decline in revenue generation which is attributed to decrease in petroleum product sales by 7.11%.

Also, losses were incurred by PPMC, being the sole supply of last resort in its drive to bridge the petroleum products supply gap as acute shortage which compelled PPMC to sometime engage in a commercially unfavourable short term arrangements. Other factors that contributed to the high operations cost in CHQ includes expenses related to the ongoing restructuring program.

NPDC’s crude sale for the month is still hampered by forcados pipeline vandalism which continued to deny NPDC of monthly crude oil revenue of about ₦20.0billion

The better of it, is that NNPC leadership is already diligently addressing the Corporation’s key business and operational challenges. For the first time, NNPC was able to get the buy-in of the upstream companies operating in Nigeria to enhance domestic supply of refined petroleum products by indicating readiness to make available additional funding to support import of products.

NNPC has been restructured into five distinct operational areas (Upstream, Downstream, Refineries, Gas & Power and Ventures) for efficiency, profitability and value creation for the common good of the Corporation and its stakeholders.

The report also highlighted our activities for twelve months period of May 2015 – April 2016 to allow for trend recognition. NNPC has maintained effective communication with stakeholders through monthly financial and operational reports, weekly podcast, regular Town halls and focused briefs and publications.

This is in line with the Corporation’s commitment to becoming a FACT based Organization. We will remain focused, accountable and transparent.

Activity update

NNPC is collaborating with IOCs to carry out Value for Money Review on all the Federation upstream Joint venture projects. On the unfavorable PSC regimes, NNPC is currently reviewing the agreements with a view to negotiate more favorable regimes.

About 55.2% of the total Domestic Crude Oil supply in the month of April 2016 was via Direct Sales Direct Purchase Agreement (DSDP). Refineries rehabilitation is also at full speed to address the perennial shortage of fuel in the Country.

This is in addition to colocating of smaller refineries to leverage on the existing facilities and boost the nation’s refining capacity from 445,000 barrels per day to 650,000. NNPC restructuring is also on-going. The program intends to restructure the Corporation into value adding autonomous entities in congruence with the overall Corporate vision.

National Crude Oil & Natural Gas Production, Lifting and Utilization

National Crude Oil & Condensate Production

A total of 57.43 million barrels of crude oil & condensate was produced in the month of March 2016 representing an average daily production of 1.85 million barrels.

This represents a decrease of 3.10% compared to February 2016 performance. Of the March 2016 Production, Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 35.25% and 42.30% respectively.

While AF, NPDC and Independent accounted for 16.40%, 1.80% and 4.25% respectively. The tables and charts below provide details of the National Crude Oil & Condensate Production for the period April 2015 to March 2016.


 



The NPDC PTD cumulative production from all fields amounted to 33,175,554 barrels of Crude oil which translated to an average daily production of 90,644 barrels. Comparing NPDC performance to National Production, the company production share amounted to 4.34%. NPDC production is expected to hit production level of 250,000bp/d after the completion of the on-going NPDC re-kitting project.

Production from NPDC wholly operated assets amounted to 10,001,199 barrels (or 30.15%) of the total production) with Okono Okpoho (OML 119) alone producing more than 81.32% of the NPDC wholly owned operated Assets or 24.52% of the total NPDC total production.

Also on the NPDC operated JV assets, in which NPDC own 55% controlling interest, Crude Oil production amounted to 13,527,134 (or 40.77% of the NPDC total production). On the JV assets not operated by NPDC, production level stood at 9,647,221 barrels or 29.08% of the company production


 

National Gas Production
A total of 224.76 billion standard cubic feet (BCF) of natural gas was produced in the month of April 2016 translating to an average daily production of 7.49billion standard cubic feet per day (bscfd). For the period May 2015 to April 2016, a total of 2,857.52BCF of gas was produced representing an average daily production of 7,807.53 mmscfd during the period.

Production from Joint Ventures (JVs), Production Sharing Contracts (PSC) and NPDC contributed about 70.14%, 21.55% and 8.32% respectively to the total national gas production. The table and charts below provide details of the national gas production for the period May 2015 to April 2016.

 

 

 

Crude Oil & Condensate Lifting & utilization

A total volume of 59.67 million barrels of crude oil and condensate was lifted in the month of March 2016 by all parties. Out of this volume, 24.13 million barrels was lifted by NNPC on behalf of the Federation. This comprises of 19.14 million barrels lifted on the account of NNPC while 4.22 million and 0.77 million was superintended for FIRS and DPR respectively.

 


Of the 19.14 million barrels lifted on the account of NNPC in March 2016, 14.19 million barrels and 4.95 million barrels were for domestic and export markets respectively.

At an average oil price of $38.71/bbl and exchange rate of N196/$, the domestic crude oil lifted by NNPC is valued at $549,095,159.11 or a Naira equivalent of N107,622,651,185.95 for the period.

The remaining crude oil lifted for export was valued at $191,302,792.96 at an average price of $38.64/barrel. The total value of crude oil lifted on the account of NNPC in March, 2016 was thus $740,397,951.08.

From April 2015 to March 2016, a total volume of 771.79 million barrels of crude oil and condensate was lifted by all parties.

The tables and charts below provide the details of crude oil and condensate lifting and their corresponding accrual values for the period April 2015 to March 2016.


 


Utilization of Crude Oil for Domestic Product Supply

 

In March 2016, NNPC lifted 14,185,585.00 barrels of Crude Oil for domestic utilization translating to an average volume of 457,599.52 barrels of oil per day in terms of performance.

In order to meet domestic product supply requirement for the month of March, 2016 about 9,493,824 barrels of crude oil was processed through Offshore Processing Agreements (OPA), while 1,897,063 barrels was processed as Direct Sales Direct Purchase (DSDP) whereas 904,221 barrels was sold in the export market and the balance of 1,890,477 was processed in the domestic refineries.

Tables and charts below provide details of NNPC’s Utilization of Crude Oil for Domestic Product Supply for the period of April 2015 to March 2016.

 

Natural Gas Off take, Commercialization & Utilization

 

Out of the 223.61 BCF of gas produced in April 2016, a total of 123.56 BCF of gas was commercialized comprising of 26.56 BCF and 97.00 BCF for the domestic and export market respectively. This translates to an average daily supply of 1,043.05mmscfd of gas to the domestic market and 3,344.68mmscfd of gas supplied to the export market.

This implies that 55.26% of the total gas produced was commercialized while the balance of 44.74% was either re-injected, used as upstream fuel gas or flared. Gas flare rate was 7.47% for the month of April 2016 i.e. 556.52mmscfd compared with average Gas flare rate of 8.68% i.e. 674.61mmscfd for the period May 2015 to April 2016.

 


Total gas supply for the period May 2015 to April 2016 stands at 381.82 BCF and 1,223.53 BCF for the domestic and export market respectively. The table 2.5.1 and chart 2.5.1 provides more details of the gas utilization and commercialization for the period May 2015 to April 2016. Table 2.5.2 Daily Average Gas Commercialization and utilization.



From the 885.29mmscfd of gas supplied to the domestic market in April 2016, about 540.75mmscfd of gas representing 61.08% was used for Gas-Fired power plants while the balance of 344.55mmscfd or 38.92% was supplied to other industries.

Similarly, for the period of March 2015 to April 2016 an average of 1,043.05mscfd of gas was supplied to the domestic market comprising of an average of 686.49mmscfd or (65.82%) as gas supply to the power plants and 356.57mmscfd or (34.18%) as gas supply to industries.

About 2,754.30mmscfd or 85.18% of the export gas was sent to Nigerian Liquefied Natural Gas Company (NLNG) for April 2016 compared with an average of 2,812.35mmscfd for the period May 2015 to April 2016.

Refinery Operations

Capacity Utilization

Total Crude processed by the three Refineries, for the month of April 2016 was 351,698MT (2,578,650 bbls) which translate to a combined yield efficiency of 89.70% compared to crude processed in March 2016 of 329,396MT (2,415,131 bbls) with combined yield efficiency of 94.98%.

For the month of April 2016, the three Refineries produced 318,104MT of finished Petroleum Products out of 351,698MT of Crude processed at a combined capacity utilization of 19.32% compared to 17.51% combined capacity utilization achieved in the month of March 2016.

The improved performance was due to success achieved by the domestic Refineries, for the first time in several months the three Refineries operated concurrently.



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