Business

Okono Okpoho facility: Of marginal trade surplus and zero crude oil lifting

Beyond the crude oil export receipts by the Nigerian National Petroleum Corporation (NNPC), which hit $120.49 million in September, the corporation recorded marginal decrease in its month-on-minth surplus. ADEOLA YUSUF, in this report, shows the role zero crude oil lifting from the Okono Okpoho facility played in this

 

The September 2020 Monthly Financial and operational Report (MFOR) of the Nigerian National Petroleum Corporation (NNPC) indicated a trading surplus of ₦28.38 billion. This amount is slightly lower than the ₦29.60 billion surplus in August 2020.

 

Confirming this marginal decrease in surplus, the NNPC maintained that this was as a result of lower contribution from the Nigerian Petroleum Development Company (NPDC), which recorded zero crude oil lifting from the Okono Okpoho facility during the month due to ongoing repairs. In other flip, the corporation raked in a total export receipt for crude oil and gas valued at $120.49 million for the month of September 2020.

 

A press release by the Group General Manager, Group Public Affairs Division of the corporation, Dr. Kennie Obateru, stated that the figure was contained in the September 2020 edition of the NNPC Monthly Financial and Operations Report (MFOR). How did these happen?

Revenue surge

 

The $120.49 million crude oil and gas export receipt is a 16.28 per cent improvement on the $100.88 million posted in August 2020. The report showed that out of the figure, proceeds from crude oil amounted to $85.40 million while gas and miscellaneous receipts stood at $25.31 million and $9.78 million respectively.

 

The September 2020 MFOR also indicated a trading surplus of ₦28.38 billion slightly lower than the ₦29.60 billion surplus in August 2020.

 

 

“The marginal reduction in surplus, according to the report, was as a result of lower contribution from the Nigerian Petroleum Development Company (NPDC), which recorded zero crude oil lifting from the Okono Okpoho facility during the month due to ongoing repairs,” the report read.

 

Contributions from Others

 

However, other NNPC subsidiaries namely the Integrated Data    Services Limited (IDSL), National Engineering and Technical Company Limited (NETCO), Nigerian Gas Marketing Company (NGMC), Petroleum Products Marketing Company (PPMC) and NNPC Retail posted impressive trading results recording 268 per cent,

 

234 per cent, 21 per cent, 422 per cent and 41 per cent trading surpluses respectively over their previous month’s performance. In the gas sector, a total of 223.82billion cubic feet (bcf) of natural gas was produced in the month under review translating to an average daily production of 7,460.80million standard cubic feet per day (mmscfd).

 

For the period September 2019 to September 2020, a total of 3,039.05bcf of gas was produced representing an average daily production of 7,730.35mmscfd during the period. Period-to-date production from Joint Ventures (JVs),

 

Production Sharing Contracts (PSCs) and NPDC contributed about 69.10 per cent, 20.29 per cent and 10.61 per cent respectively to the total national gas production.

 

Like oil, like gas

 

Out of the 221.91bcf of gas supplied in September 2020, a total of 140.45bcf was commercialised, consisting of 36.37bcf and 104.08bcf for the domestic and export markets respectively.

 

This translates to a total supply of 1,212.17mmscfd of gas to the domestic market and 3,469.45mmscfd of gas supplied to the export market for the month. This implies that 63.29 per cent of the average daily gas produced was commercialized while the balance of 36.71 per cent was re-injected, used as upstream fuel gas or flared.

 

Gas flare rate was 6.66 per cent for the month under review (i.e. 492.93mmscfd compared with average gas flare rate of 5.84 per cent i.e. 439.90 mmscfd for the period of September 2019 to September 2020).

 

To ensure effective supply and distribution of Premium Motor Spirit (PMS) across the country, a total of 0.59bn litres of PMS translating to 19.59mn liters/day was supplied for the month in the downstream sector.

 

During the period under review, 21 pipeline points were vandalised representing about 43 per cent decrease from the 37 points recorded  in August 2020. Of this figure, Mosimi Area accounted for 90 per cent of the vandalised points, while Port Harcourt Area accounted for the remaining 10 per cent.

 

NNPC, in collaboration with the local communities and other stakeholders, continuously strive to reduce and eventually eliminate this menace. The 62nd edition of the MFOR highlights NNPC’s activities for the period of September 2019 to September 2020.

 

IEA slashes 2021 oil demand outlook for Nigeria, others

While NNPC’s report shows good results, the International Energy Agency on Tuesday slashed its 2021 global oil demand forecast, citing soaring Covid-19 cases and renewed lockdown measures that will further limit mobility.

 

Nigeria, Africa’s biggest crude oil exporter, depends majorly on proceeds from the commodity to service over 85 per cent of its budget. It sets $40 per barrel as benchmark for oil in its 2021 appropriation.

 

The IEA however predicted a slow recovery for oil, maintaining that it now expected world oil demand to recover by 5.5 million barrels per day to 96.6 million this year. That reflects a downward revision of 0.3 million barrels from last month’s assessment and follows an unprecedented collapse of 8.8 million barrels per day last year as the coronavirus pandemic battered global oil markets.

 

COVID-19

 

The IEA’s latest oil market report comes as countries continue to implement strict public health measures in an attempt to curb virus spread, with lockdowns imposed in Europe and parts of China.

 

The Paris-based energy agency said oil demand growth was projected to fall slightly during the first three months of the year in the wake of tougher government plans that call for additional travel restrictions. This is expected to curb worldwide mobility once again, prompting the IEA to trim its first-quarter forecast for oil demand growth to 94.1 million barrels per day

 

That would see oil demand return to near year-ago levels and reflects a downward revision of 0.6 million barrels from December’s oil market report.

 

“The global vaccine roll-out is putting fundamentals on a stronger trajectory for the year, with both supply and demand shifting back into growth mode following 2020 as unprecedented collapse,” the IEA said in its closely-watched report. “But it will take more time for oil demand to recover fully as renewed lockdowns in a number of countries weigh on fuel sales,” it added.

 

Oil price rally

 

Oil prices have rallied in recent weeks, supported by optimism over Covid vaccine rollouts and a surprise oil production cut from OPEC kingpin Saudi Arabia.

 

However, the relatively slow pace of inoculations has raised doubts over how soon economies can recover. International benchmark Brent crude futures traded at $55.26 a barrel on Tuesday morning, up more than 0.9 per cent, while U.S. West Texas Intermediate futures stood at $52.51, around 0.3 per cent higher.

 

Both benchmarks fell more than 2.2 per cent in the previous session, notching their worst daily performance since Dec. 21.

 

Oil pumping jacks, also known as “nodding donkeys,” in a Rosneft Oil Co. oilfield near Sokolovka village, in the Udmurt Republic, Russia, on Friday.

 

The OPEC+ angle

 

OPEC and its non-OPEC allies, an alliance sometimes referred to as OPEC+, cut oil production by a record amount in 2020 in an effort to support crude prices, as strict public health measures worldwide coincided with a fuel demand shock.

 

OPEC+ initially agreed to cut output by 9.7 million barrels per day, before easing cuts to 7.7 million and eventually scaling back further to 7.2 million from January.

 

OPEC’s de facto leader Saudi Arabia has since said it plans to cut output by an extra 1 million barrels per day in February and March to stop inventories from building up. Last week, OPEC kept its 2021 forecast for worldwide oil demand unchanged.

 

The 13-member group anticipated demand growth to increase by 5.9 million barrels per day year on year to average 95.9 million.

 

Last line

 

In line with the Corporation’s commitment of becoming more accountable, transparent and driven by performance excellence, the Corporation has continued to sustain effective communication with stakeholders through the MFOR and other reports published on its website and in national dailies.

 

With the September result, which showed a marginal decrease in surplus, and the IEA predictions, Nigeria, nay NNPC, has a lot to do with full deployment of accountability and transparency in business

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