Thursday, January25, 2018 /09:05AM /FBNQuest Research

In October the NNPC’s operating deficit fellsharply from N2.8bn the previous month to N407m (US$1.3m). Before central costsand ventures, a profit from production (N16.9bn) covered the losses fromrefineries (N7.8bn) and retail/marketing (N1.6bn). 

The corporation’s Financial and OperationsReport for October notes a gentle decline in crude output (includingcondensates) in September to 1.93 mbpd from 1.99 mbpd. The commentary reportsthe various production shut-ins, adding that the worst was at the Qua Iboeterminal (of 195,000 bpd).      

Therefineries had a slightly better month in October. Port Harcourt processed279,000 metric tonnes (mt) of crude and Warri 53,000 mt while Kaduna’s outputwas zero for the fifth month in succession. The refining companies produced acombined total of 115,000 mt in September. 

The operating deficit hasdeclined to N69bn in January-October 2017 from N162bn in the year-earlierperiod. It compares with the budget for the year ytd of an operating profit ofN501bn. While central headquarters costs in the period were lower than budgeted,the three revenue areas all underperformed, production most of all. 

Without a legal frameworkfor the industry and an overhaul of the refineries, further upside is limited.In the period sizeable operating surpluses were reported by the NigerianPetroleum Development Company (NPDC; N82bn) and the Nigerian Gas Processing andTransportation Company (N57bn). 



The financial results arereported at an operational level so do not show below-the-line-items. Thecommentary does not shed any light on the accounting treatment of retail salesof petroleum products. We cannot therefore add anything to the discussion aboutthe reported gap between the maximum retail price of gasoline/petrol and thesaid landing cost. 



Related News
1. Best Monthly Result Since May 2016; NNPC’s Operating Deficit Halved from N5.7bn to N2.8bn
2. Oil Prices Rise On Brighter Global Economic Prospects, OPEC Cuts
3. House of Representatives Passes Petroleum Industry Governance Bill
4. NNPC to Build More Depots, Expand Market Share
5. The Shale Surge Is Far From Over - OilPrice Intelligence Report
6. Factors That Will Affect the Price of Oil in 2018
7. Why Africa’s top oil producer is low on gasoline
8. The Prominence of Electric Vehicles
9. Geopolitical Wildcards Could Push Oil Beyond $70
10. Average Prices of PMS, AGO, HHK and Cooking Gas –December 2017