NNPC Earns $20.9bn from Crude Oil Sales

Dizeani Alison Madueke, Petroleum Minister

The total year-to-date (YDT) earnings of the Nigerian National Petroleum Corporation (NNPC) from sale of crude oil in the first seven months of 2013 has been put at $ 20,907,063,959.35. In a presentation Thursday to members of the House of Representatives Committee on Petroleum (Upstream) on crude oil production and sales during the period, NNPC disclosed that the total earnings, however, do not include earnings from petroleum profit tax for Joint Venture (JV) operations, which it said are paid directly to the Federal Inland Revenue Services (FIRS). The total earnings as presented by NNPC’s Group General Manager, Corporate Planning and Strategy, Dr. Timothy Okon, in Abuja, showed that 191,939,235 barrels of crude oil were sold by the corporation in the seven months under review. The committee was led by its chairman, Hon. Ajibola Muraina, who pledged the commitment of the legislators to curbing extant challenges militating against the efficiency of the Nigerian petroleum sector, especially the activities of NNPC.
A section of the presentation showed the see- sawing production figures of the corporation, ostensibly as a result of crude oil theft. In January, NNPC sold 37,675,591.00 barrels of crude oil at the average price of $115.063 per barrel, giving it a total value of $ 4,335,074,932.80. In February, the crude oil sold by the corporation fell sharply to 20,590,812.00 barrels and was sold at $114.537 per barrel, amounting to $2,358,404,115.85. In March it rose to 30,901,111.67 barrels at $ 108.446 per barrel, which gave it receipts of $ 3,351,093,908.30, while in April it fell again to 25,116,194.39 barrels at $102.887 per barrel, from which it earned $2,584,129,014.73. In May, the corporation recorded sales of 28,411,526.25 barrels at $105.043 amounting to $2,984,420,474.02; June - 24,708,531.80 barrels at $105.384 per barrel, amounting to $ 2,603,889,561.08, while July sales stood at 24,535,468.00 barrels at $109.639, amounting to $2,690,051,952.58. While responding to questions from journalists shortly after the closed-door meeting, Muraina stated that the reports presented to the committee by the NNPC showed that the corporation requires the support of Nigerians to overcome its challenges in the industry. He said rather than castigation and name calling, Nigerians should work closely with NNPC to stem the tide of crude oil theft which he said was being contained following the implementation of proactive measures against the practice. “We are here for our oversight functions. You know that over 100 million Nigerians cannot oversight the performance of this all- important industry; that is why we have been elected as their representatives to see their performance. “Look into their records, proffer solutions to their problems and challenges so that the corporation can continue to move ahead to generate more funds for the use of the Federal Republic of Nigeria. “That is the whole essence of our coming here and in a most incisive manner, they have presented the facts to us and we have also been presented with their challenges of which several of them we are aware of and you know the steps we have taken particularly on the issue of oil theft,” he said. Muraina further noted: “As a proactive House, we had taken steps on that matter to set up a joint petroleum committee and we had come up with resolutions and have called on the government to make sure that they implement the resolutions. “We have been assured that in conjunction with the NNPC, the federal government is already implementing many of these resolutions and they have also assured us that as a result of this implementation, there is a drop with regard to oil theft and we hope and pray that these efforts will continue so that we can continue to generate more revenue for the use of our country.”
On the status of the Petroleum Industry Bill (PIB), which is awaiting passage by the National Assembly, Muraina said: “You heard where we are and you know where we are, we had a public hearing in Abuja after the zonal ones, and as it is now, the committees are trying to dot the Is and cross the Ts. “Of course we are also looking at what is happening in other jurisdictions of this world so that we can come up with a world class legislation that can help this country. “Like you know, we are working very hard on it and I believe that unlike the last House, when we started on it very late, this one by the grace of God, we will get it very quickly because we started early.” Meanwhile, the Group Managing Director of NNPC, Andrew Yakubu, has hinged the rise in domestic refining of petroleum products to the passage of the PIB. Yakubu, who was represented by the Managing Director of the Nigerian Petroleum Development Company (NPDC), Victor Briggs, at the 3rd Annual Upstream and Downstream Oil and Gas Conference in Abuja described the PIB as a veritable legislation capable of turning around the petroleum refining sub-sector in the country. He said the draft reform law would not only sanitise the downstream sector but would serve as the one-stop shop guide for operations in the petroleum industry.
“This can only be attained in an environment where clear ground rules are set and oligopolistic market distortions are removed. For an effective and competitive domestic petroleum products market to be developed in Nigeria, the PIB proposes deregulation of the downstream petroleum sector. “This will encourage investment in refining and marketing infrastructure,” Yakubu said in a statement from the corporation. While acknowledging the fact that the downstream petroleum sector faces enormous challenges, which have over time hampered third party investments in new refineries, he noted that the PIB would engender a regime where petroleum products would be delivered at cost reflective prices. Also, there are indications that the combined crude oil production capacity of indigenous oil companies and the Nigerian Petroleum Development Company (NPDC), the upstream arm of NNPC, will rise to about 400,000 barrels per day by 2016. The expected increase follows the development of more marginal oil fields and the aggressive drilling currently embarked upon by the NPDC. Speaking at a stakeholders' forum with marginal field operators convened by the Department of Petroleum Resources (DPR), Managing Director of Platform Petroleum, operator of Asuokpu/Umutu field, Mr. Austin Avuru, said although only eight out of the 24 marginal fields awarded to indigenous companies in 2004 are currently producing, the programme has helped to grow local participation in the Nigerian oil and gas industry. He recalled that for 10 to 15 years, indigenous companies produced only about 10 per cent of Nigeria’s total oil output, but production has since increased to about 20 per cent with the coming on stream of some of the marginal oil fields. Avuru, who is also the MD of Seplat Petroleum, called on the federal government to support local companies in their growth aspirations, pointing out that Nigeria’s domestic fuel consumption requirements could only be met by local companies.
He said the greatest challenge facing operators is how to deliver the crude produced from the marginal fields to export terminals, adding that the cluster companies lose as much as 30 per cent of their total daily production to theft. Avuru, however, faulted the recent statement by Shell Petroleum Development Company (SPDC) that 20 per cent of the crude is stolen through the pipelines, insisting that what petty oil thieves steal from the pipelines could not be up to three per cent. Instead, he blamed massive crude oil theft on metering at the flow stations by oil majors, adding that the solution to crude theft lies with the operators and advised oil companies to create processes to engage the communities and reduce criminality. Earlier, the Director of DPR, Mr. George Osahon, restated Nigeria’s aspiration to grow oil reserves by 40 billion by 2020, but noted that achieving the target would depend to a large extent on crude production from the marginal oil fields. He disclosed that four more marginal fields were nearing production and would help raise local production and capacity. The director, who expressed regrets that some companies had acquired the oil assets but had not developed them years after, said their inability to develop the assets would not deter the government from conducting further oil- licensing rounds.
The DPR last month put crude oil production from the nation’s marginal field at 60,000bpd and gas production at 15 million standard cubic feet per day.