• Tuesday, June 25, 2024
businessday logo


While NNPC forages for cash, its peers pay bumper dividend

NNPC eyes three mini-LNG projects in August

…Aramco pays $124.3bn dividend

Some national companies who have released their 2024 first-quarter results are paying dividends, but for Nigerian National Petroleum Company Limited (NNPC), an inability to reform continues to rain on its parade.

Saudi Aramco said on Monday it expected to declare total dividends of $124.3bn this year, a rise of almost 30 per cent compared with last year, when it also increased payments by 30 per cent to $97.8bn after reporting the second highest annual profits in its history.

The payout from the world’s largest oil producer remains the most important source of revenue for the Saudi state, which owns 82 per cent of the company, especially as the kingdom struggles with a budget deficit amid subdued oil prices.

The International Monetary Fund (IMF) has previously said that Riyadh will need an average oil price close to $100 a barrel to balance its budget amid its spending, a level not seen so far this year.

The state, which controls a further 16 per cent of Aramco through the Public Investment Fund (PIF), the country’s sovereign wealth fund, wants to use the proceeds from oil to fund mega projects including new cities, the world’s tallest skyscraper and a vast building shaped like a cube in downtown Riyadh.

Read also: Saudi Aramco, ADNOC are betting on AI. Is NNPC aware?

Apart from Aramco, Abu Dhabi National Oil Company (ADNOC), the state-owned oil company of the United Arab Emirates on Tuesday said its revenue reached $6.01 billion in the first quarter, up by 15 percent compared to $5.22 billion in the same quarter last year.

Adnoc Gas fulfils more than 60 percent of the UAE’s gas demand and is the largest supplier to the petrochemical sector in the country.

“While delivering improvement across all key metrics, we have made significant progress on our strategic growth projects, including signing additional LNG sales agreements that reinforce our position as a trusted and reliable global supplier,” Ahmed Alebri, CEO of Adnoc Gas said.

Alebri highlighted the high cash conversion rate, with free cash flow generation increasing by 47 percent to $1.183 billion.

“This robust cash flow will support a 5 percent growth in the annual dividend to $3.41 billion in 2024, aligning with ADNOC Gas’ dividend policy,” Alebri said.

He added, “Shareholders can expect an annual dividend yield of over 5 percent and the potential for share price appreciation, thanks to the company’s financial performance and portfolio of growth projects”.

The positive result recorded by the national oil companies showed oil is gradually making a comeback, even as that impact seems not to trickle down in one of the world’s poorest countries, Nigeria.

Read also:NNPC owes oil traders $3bn backlog for petrol subsidy

The NNPC has not published its full year 2023 reports and its first-quarter earnings of 2024 but it doesn’t take a seer to understand that the oil corporation is flailing.

Some industry operators say that after shouting itself hoarse over the need to stop the wasteful fuel subsidies, Nigeria’s petrol subsidy returned and is now bigger than the amount being paid before President Bola Tinubu stopped the costly practice last May.

I can tell you for free that there there is at least N400 or N500 liters subsidy on petrol today. If you look at our daily consumption, say 40 million liters, and we’re spending N500 per liter, that is about N20 billion every day, N600 billion every month and 7.2 trillion yearly depending on how we look at it. So, subsidy is definitely back on petrol,” Gabriel Ogbechie, CEO of Rainoil Limited said during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos.

Apart from subsidies, oil output from Nigeria has been low in recent years, and the country recorded its lowest oil production volume of 0.94mbpd in September 2022.

The country’s low production has been attributed to massive crude oil theft in Nigeria’s oil-rich Niger Delta, ageing oil fields, poor crude oil terminal maintenance, shutdowns, and reduced investments in the upstream oil and gas sector.

“The situation has led to significant revenue losses for the country. The federal government has sustained efforts to reinforce pipeline surveillance and clamp down on oil theft. However, results appear slow and inconsistent,” analysts at CSL stockbrokers said on April 15 2024.

Read also: Saudi Aramco’s $97.8bn dividend payment raises questions for NNPC

Security for oil assets, many analysts say, has not been treated with the seriousness it deserves, considering that it is responsible for the nation’s revenue.

Shipping data and information from industry sources seen by a Reuters survey showed Organisation of Petroleum Exporting Countries (OPEC) pumped 26.49 million barrels per day (bpd) in April, down 100,000 bpd from March’s revised total.

The biggest output reductions in April came from Iran, Nigeria and Iraq, the survey found.

Sources told Reuters that Nigerian production declined, with exports falling more sharply according to some ship trackers as the Dangote refinery took in more cargoes.

“An outage briefly affected the Bonny production stream in April,” the source said.

The Bonny oil pipeline system is the largest pipeline network in the Niger Delta. It transports oil, water and associated gas from the eastern and central delta to the Bonny Oil and Gas Terminal (BOGT).

The terminal, situated on Bonny Island, 48 kilometres southeast of Port Harcourt, is the biggest in Africa with a capacity to process and export 1.25 million bpd.

“I have said it time and time again crude oil receipts will be low because Bonny terminal is still dilapidated,” Emeka Anazodo, an energy analyst and a member of the Society of Petroleum Engineers said.