The Nigerian National Petroleum Corporation (NNPC), reported a deficit of N26.51 billion from its operations in June, just one month after posting a record trading surplus of N274 million in May.
The June 2016 monthly operations and financial report of the corporation which it released last Sunday indicated that it had failed to continue on the positive operational trend it reported in May because of a 13.30 per cent decline in the sales of its subsidiary downstream company – the Pipeline and Products Marketing Company (PPMC) among other issues.
Other operational issues which NNPC said influenced its deficit record in the month of June included reported huge incidents of vandalism at up to 261 points of its pipeline.It also stated that a substantial portion of crude oil sales of its exploration and production subsidiary – the Nigerian Petroleum Development Company (NPDC), for the month estimated to be in excess of the reported deficit could also not be realized due to ‘force majeure’ declared by Shell Petroleum Development Company (SPDC) following the break on 48-inch Forcados export line.
According to it, local refining capacity remained below commercial threshold within the month due to prolonged Turn Around Maintenance (TAM) issues, pipeline vandalism, and resultant losses, adding that the three refineries in Port Harcourt; Kaduna; and Warri had a combined operational deficit of N4.69 billion.
“This 11th publication of NNPC monthly financial and operations report indicate a deficit of N26.51 billion as against trading surplus of N274 million reported in May, 2016.
“This trading surplus does not represent net profit as there are other expenses that should ordinarily have been captured. The deficit in the month of June 2016 was majorly due to decrease in revenue generation as a result of decline in PPMC petroleum products sales by 13.30 per cent or N14.9 billion and increase in products distribution costs.
“Also June 2016 operations witnessed the major impact of incessant vandalism, during the month more than 261 vandalized, points were recorded. In NPDC a substantial portion of crude oil sales for the month estimated to be in excess of the deficit could not be realized due to force majeure declared by SPDC as a result of vandalized 48-inch Forcados export line,” said the report.
According to it: “The combined value of output by the three refineries (at import parity price) for the month of June 2016 amounted to N24.68 billion while the associated crude plus freight cost was N22.25 billion, giving a deficit of N4.69 billion after considering overhead of N7.12billion. This deficit for the month was primarily due to irregular crude oil supply and impact of pipeline vandalism.”
