Eight subsidiaries of the Nigerian National Petroleum Corporation (NNPC) declared a massive N83.9 billion trading surplus between September 2018 and October 2019, an unprecedented feat for the state oil firm long associated with making losses.
The NNPC recorded a cumulative N83.9 billion surplus last year led by Nigerian Petroleum Development Company (NPDC), which turned in a massive N249.3 billion from upstream activities, indicating that the corporation is ramping up explorative activities.
“All too often, the corporation gets criticised for poor performance, but now it has performed remarkably well and should be commended,” said Victor Eromosele, CEO at M.E Consulting, a Lagos-based energy consultancy. “Whatever the NNPC did to find its mojo, it should keep doing that.”
While the corporation has had periods where at least eight of its 15 subsidiaries declared a trading surplus, the amount realised in the period under review is the highest the corporation has ever realised from its subsidiary business. This far outweighed corporate headquarters, which is fast emerging NNPC’s biggest cost centre.
Analysis of the corporation’s record showed that in 2017, it made a cumulative trading surplus of N50 billion and for most of 2018 it did not record a trading surplus.
To arrive at a surplus or deficit computation, the corporation subtracts revenue from its expenses and reports the balance as surplus when it is positive and deficit when it is negative.
In its October 2019 Financial and Operations Report, the NNPC declared a trading surplus of N13.23 billion, representing an increase of 54 percent over the N8.59 billion surplus posted in September.
The NNPC said total crude oil and gas export sales of $483.25 million was recorded in October 2019, which is an increase of 35.77 percentage point compared to the previous month. This implies that in the month under review, crude oil export sales contributed $396.94 million (82.14 percent) of the dollar transactions, compared with $267.97 million contribution in September 2019, even as the export gas sales for the month amounted to $86.32 million.
Overall, the October 2018-October 2019 crude oil and gas transactions indicated that crude oil and gas worth $5.49 billion was exported.
To underline the increasing fortunes of the corporation in recent times, the September 2019 trading surplus of N8.59 billion, in turn, indicated a significant increase of 65 percent compared to the N5.20 billion surplus posted in August 2019, even as that beat the N4.26 billion surplus posted in July 2019, reflecting an increase of 22 percent, the NNPC said.
NPDC, the NNPC’s best performer last year, is becoming more prolific in oil exploration in Nigeria, leading to its getting awarded more fields. Last month, the NNPC signed a partnership agreement with Nigeria Agip Oil Company (NAOC) to boost the reserve base. NNPC’s interest was transferred to NDPC as part of its efforts to grow NPDC into a medium-sized upstream company.
According to data from the Department of Petroleum Resources, the NPDC only has 100 percent ownership and oversight of six of the 111 Oil Mining Leases (OMLs) in Nigeria but participates in most other productive licences held by NNPC and operated in collaboration with capable private sector players mainly under Joint Venture (JV) and Production Sharing Contracts (PSC) arrangements.
However, the NNPC’s three refineries – Kaduna, Port Harcourt and Warri – blighted the corporation’s performance accounting for a whopping N123.2 billion in deficit within the period.
Other subsidiaries which dented the corporation’s performance include NPSC, Shipping, Corporate Headquarters, and ventures who cumulatively record deficits of N182 billion.