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NNPC2016REPORT

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BudgIT is a civic organisation driven to make the Nigerian budget and public data more understandable and accessible across every literacy span. BudgIT’s innovation within the public circle comes with creative use of government data by presenting these in simple tweets, interactive formats or infographic displays. Our primary goal is to use creative technology to intersect civic engagement and institutional reform.

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Extractive Team: Hafsat Ajia-Egbeyemi and Adejoke Na�sat Akinbode

Creative Development: Kehinde Agbaje

Contact: [email protected], +234-803-727-6668, +234-908-333-1633

Address: 1st Floor, No. 55 Moleye Street, Alagomeji, Yaba, Lagos, Nigeria.

© 2017

Disclaimer: This document has been produced by BudgIT to provide information on budg-ets and public data issues. BudgIT hereby certi�es that all the views expressed in this docu-ment accurately re�ect our analytical views that we believe are reliable and factbased.

Whilst reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors or views expressed herein by BudgIT for actions taken as a result of information provided in this Report.

ABOUT BUDGIT

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The Buhari administration took over the Reins of governance in May 2015 and immediately set to work dismantling and reassem-bling the board and key sta� of the national oil giant, the Nigeri-an National Petroleum Corporation [NNPC].

Dr. Ibe Kachikwu was appointed as the Group Managing Director (GMD) from August 2015; however, this arrangement was disrupt-ed when Dr. Kachikwu was replaced as the GMD of NNPC, with Mr. Maikanti Baru, who had previously served as Special Adviser (Upstream) to the Minister of State for Petroleum.

During Dr. Kachikwu’s reign as the GMD of NNPC, he implement-ed a couple of innovations that was meant to drive transparency, accountability and openness in the Corporation, one of them being the monthly publication of the �nancial and operations report of NNPC.

This compilation of NNPC monthly reports over the period of January-December 2016 details some of the changes undertak-en.

NNPC 2016 REPORT

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INTRODUCTION

Transparency

Accountability

Openness

NNPC 2016 REPORT

CRUDE OIL LIFTING

The Niger Delta Avengers started their attacks on several oil installations, causing a reduction in Nigeria’s oil output, the lowest in 20 years as reported by some news outlets. Nigeria recorded a reduction of 112.1 million barrels of crude oil sold between December 2015 and December 2016.

This enabled Angola to overthrow Nigeria as the largest crude oil producing country in Africa, (Ref: OPEC Monthly Oil Market Report (May 11, 2017))

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780.69m

668.59m

2015 2016(source: NNPC monthly report)

Oil sale comparison between 2015 and 2016 (barrels)

112.1mbarrels was recorded as

reduction in crude oil sales between December 2015

and December 2016

1.87m barrels

Average daily crude lifted

14.35%Decrease in Oil

production between December 2015 and

December 2016

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NNPC 2016 REPORT

VALUE OF SOLD CRUDE:WERE THE FIGURESTAMPERED WITH?

$33.82bnTotal Value of crude

oil sold in 2016

6

The total value of crude sold in 2016 amounted to $33.82 billion. This highest recording month was *October at $8.84 billion, even though the barrels of crude oil sold in that month was not remarkable at 53.38 million barrels. The value of crude oil sold does not appear to realistically tally with the amount of crude oil sold, as about 53 million barrels of crude oil was sold in August of the same year, 2016, and the value of the crude oil amounted to only $2.51 billion. Where did the extra $6 billion come from?

8.84bn

(Source: NNPC monthly report)

Totalamount of crude oil lifted(barrels)

Total amount of crude oil lifted(USD)

JANUARY

MONTH

FEBRUARYMARCHAPRILMAYJUNEJULY

AUGUSTSEPTEMBER*OCTOBERNOVEMBERDECEMBER

67.59m 1.96bn759.80m

2.30bn2.49bn

2.54bn2.39bn

2.12bn2.51bn

2.32bn

2.95bn2.60bn

61.24m59.66m59.46m54.93m

49.47m46.04m53.61m48.76m

53.38m65.50m

48.90m

NNPC 2016 REPORT

DOMESTIC UTILISATIONOF CRUDE OIL

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NNPC stopped its utilisation of crude for o�shore processing agreements and replaced it with Direct Sales Direct Purchase (DSDP) but their reports showed that every month 0.95 million barrels of crude oil was utilised for product swaps. Why is this so?

Direct Sales Direct PurchaseO�shore Processing


5000

0

10,000

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec.

NNPC UTILIZATION OF CRUDE OIL FOR DOMESTIC PRODUCTS (2016)

0.95mbarrels

was utilized for product swaps

bbls

NNPC 2016 REPORT

AVERAGE DAILY GAS SUPPLIED TO

POWER STATION

8

Jan.

734

664533

547

446

327405

469519 562 528

483

Feb. March April May June July August Sept. Oct. Nov. Dec.


The average daily gas that was supplied to the gas-powered plants over the period of the 12months under review was 518 mmscfd. This is a reduction over the average for 2015, which was 696.83 mmscfd. It can also be seen that power generated also su�ered as a result of reduced gas supply to the power plants.

696.83mmscfd

518mmscfd

2015

2016

This is a reduction of gassupplied from 696.83mmscfd in 2016 to 518mmscfd to 2015

Gas supplied to power station for entire year (mmscfd)

NNPC 2016 REPORT

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FINANCIAL PERFROMANCE OF NNPC


50

-50

100

150

200

250

Jan. Feb. March April May JuneJuly

Aug. Sept. Oct.

Nov. Dec.

Monthly Revenue (N'bn) Expenses (N'bn) Surplus/De�cit (N'bn)

NNPC made an overall loss of

in 2016N197.49bn

in May 2016

Kindly note that NNPC made a pro�t of

N274mThe annual �nancial performance of NNPC over the 12-month period under review leaves a lot to be desired. The sole pro�t made in 2016 was in the month of May, when NNPC made a pro�t of N274 million but made an overall loss of N197.49 billion.

N

2016 NNPC Financials

NNPC 2016 REPORT

THE SUBSIDIARIES(1)

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OUTSTANDING

The retail arm and the Nigeria Gas Company (NGC) showed consistent pro�tability in 2016

Jan.

N3.

94bn

N47

7m

N63

3m

N80

6mN

6.16

m

N5.

15bn

N4.

54bn

N71

8m

N4.

15bn

N25

6m N1.

95bn

N67

3m N1.

63bn

N76

2m N2.

18bn

N67

7m

N83

4m

N36

5m

N55

8m

N72

2m

N3.

01bn

N3.

71bn N

4.02

bn

N4.

13bn



NGC NET SURPLUS

NGC Net Surplus Retail Arm

NNPC 2016 REPORT

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N163m

N729m

Oct. Nov. Dec.

-N215m -N69m -N167m

N318mN303m

N178mN140m

N437m

N162m

N31m

ABOVE AVERAGE

The National Engineering and Technical Company Limited (NETCO) made pro�t through-out the year except in the months of January, March and April.

Jan.

Feb.March

April

May June July August Sept.


NETCO NET SURPLUS/DEFICIT

THE SUBSIDIARIES(2)

NNPC 2016 REPORT

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UNREMARKABLE

The Nigerian Petroleum Development Company (NPDC), Integrated Data Services Limit-ed (IDSL) and Pipelines and Products Marketing Company (PPMC) had an inconsistent �nancial performance throughout the year.

NPDC,IDSL,PPMC NET SURPLUS/DEFICIT (NGN(bn))

THE SUBSIDIARIES(3)

PPMC IDSL NPDC

-20

0

20

40

60

80

100

120

Dec.Nov.Oct.Sept.Aug.JulyJuneMayAprilMarchFeb.Jan.

NNPC 2016 REPORT

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VERY POOR

On the other hand, the Corporate Headquarters (CHQ), the Corporate Strategic Unit (CSU) and the three re�neries of Warri, Kaduna and Port Harcourt performed really poorly, barely making any pro�t in 2016. It is necessary to �nd out about the signi�-cant changes made in July that resulted in the sole pro�ts for the period.

CHQ and CSU NET SURPLUS/DEFICIT (N(bn))

THE SUBSIDIARIES(4)

-20

-15

-10

-5

0

5

10

15

DecNovOctSeptAugJulyJuneMayAprilMarchFebJan

CHQ (N'Bn)CSU (N'Bn)

NNPC 2016 REPORT

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THE SUBSIDIARIES(FINAL NOTES)

The performance of the subsidiaries raises questions about the operational activities of the NNPC Group. With only 2 consistently pro�table subsidiaries out of 11, It is impor-tant to understand the causes of the losses. Why are they performing so poorly? There is need to re-evaluate the performance e�ciency of the di�erent subsidiaries, cut down on the unnecessary operations and expenditures as well as introduce a new, robust management needed to turn around operations in line with the performances of the NNPC’s global counterparts such as Saudi Arabia’s AramCo.

out of 11 subsidiaries are pro�table all year round

2Only

WHY ARE THEY PERFORMINGSO POORLY?

??

NNPC 2016 REPORT

REFINERY CAPACITY UTILISATION: UNIMPRESSIVE

PERFORMANCE

15

Jan.

13.64

1.72

18.7119.32

16.03

12.40

6.74

19.09

13.89

23.53

12.78

7.55



Re�nery Capacity Utilisation by Months (%)

Capacity utilisation over the 12-month period stood at an average of 13.75%, after about two years of opaque operations masked as Turn-Around Maintenance operations. It is time Nigerians knew just how much is being expended on the TAM operations. Also, a proper review of the utility of the re�neries should be carried out.

Note: The domestic re�neries utilised only 22.38million bbls(3.05 million MT) of crude oil out of the 23.08 million barrels that was delivered to the re�neries. This produced 1.42 trillion litres of PMS and 600.55 million litres of Kerosene for the year 2016. Approxi-mately 8.93 million barrels of PMS and 3.77 million barrels of kerosene [Ref:http://www.kylesconverter.com/volume/litres-to-bar-rels-of-oil]

13.75%Average capacity

utilization over 12 month period

NNPC 2016 REPORT

FAAC ACCOUNT (DOLLAR):DAMNING DIFFERENCE

A total of $72.87 million was remitted by the NNPC Group into the Dollar FAAC account in 2016, markedly di�ering from the 2015 total remittance of $607.82 million.

As can be observed, money was remitted into this account only six times in both 2015 and 2016 despite a requirement for remittances to be made monthly.

The $534.95 million di�erence between the 2015 and 2016 remittances could have aided in the shoring up of the budget de�cit, which led the Nigerian government to issue the $500 million Eurobond debt. (Ref: Premium Times NG; Nigerian Government Approves $500 million Eurobond (March 29, 2017))

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Jan. Feb. March April May June July August Sept. Oct. Nov. Dec.

2015 2016$76.64m $346.20m $184.97m $4.86m $44.12m $23.88m


Total amount remitted to FAAC account 2015 & 2016

NNPC 2016 REPORT

FAAC ACCOUNT (NAIRA)

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Jan.

92.28bn

82.94bn

75.87bn

62.54bn72.32bn

62.28bn

36.55bn43.18bn51.04bn

51.50bn 52.09bn

46.37bn



Monthly total amount remitted to FAAC account (Naira)

A total of N729.02 billion was paid into the Naira FAAC account in 2016 as opposed to N1.09 trillion in 2015. An interesting aspect about the FAAC accounts (Dollar and Naira) is that the crude sales proceed or domestic crude cost di�ers from the receipts recorded for both accounts. Why is this so?

N2015

N729.02bn

N2016

N1.09tn

NNPC 2016 REPORT

YTD PIPELINEBREAKS

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Total of 2560 pipeline breaks over the 12-month period. The �gures can be seen to have drastically reduced towards the last two months of the year. This will be as a result of the

increased negotiation initiated by the government with the Niger Delta Avengers.

2560pipeline breaks in 12 months


0

50

100

150

200

250

300

350

400

Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.

YTD Pipeline Breaks in Month

NNPC 2016 REPORT

TOTAL PETROL SOLDBY PPMC

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Jan.

841.41m

919.19m

1.02bn

934.48m

1.08bn

761.04m

821.06m

945.93m

659.31m

798.18m

1.08bn

1.26bn


N30.48mlitres was the daily average

PMS sold in 2016


Monthly sales of petroleum PPMC (Naira)

NNPC 2016 REPORT

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REVIEWING KEY PERFORMANCE INDICATORS IN 7 BIG WINS (1)

KEY INDICATORSOF THE 7 BIG WINS

2.2mmbbls/d

1.8mmbbls/d

2017

2016

It is predicted that crude oil production will increase from

1.8mmbbls/d in 2016 to 2.2mmbbls/d in 2017

Crude Oil Production

7.2bcfd

7.1bcfd

2017

2016

It is predicted that gas production will increase from7.10bcfd in 2016 to 7.20bcfd

in 2017

Gas Production

An initiative commenced by Kachikwu for the growth of the oil industry in Nigeria is the 7 Big Wins which contains a list of goals with deadlines that will be utilised for the improve-ment of the oil and gas industry.

Some of the key indicators are:

Crude Oil production: It is predicted that the current crude oil production levels would have increased to 2.2 mmbbls/d by the end of 2017; as of the end of 2016 this stood at 1.8 mmbbls/d.

Increase in gas production: Increase in gas production to 7.2 bscfd at the end of 2017 is predicted in order to help ful�ll the goals of the Ministry of Petroleum. NNPC’s published report shows that the status as at the end of 2016 was at 7.10 bcfd.

Increase gas to power: Gas to power plants is also one of the targets of the ministry; the aim is to increase this to 800 mmscfd by the year 2017 and this stood at 517.92 mmscfd of the end of 2016.

Increase re�ning capacity and local production: With the continuous poor performance of the domestic re�neries, any plan to improve the industry must include plans for the better performance of the re�neries and true to form, the 7 Big wins state that by the year 2017, the re�neries would begin repairs under private sector and as of 2016, this capacity utiliza-tion stood at 13.75%.

The Ministry of Petroleum may need to resort to alternatives if it desires to achieve its aim of increased local production.

NNPC 2016 REPORT

21

Gas Power Re�ning Capacity andLocal Production

2016 2017

517.92mmscfd

800.00mmscfd

It is predicted that gas production will increase from 7.10bcfd in 2016 to 7.20bcfd in 2017

13.75%Capacity utilisation as at 2016

stood at 13.75%

REVIEWING KEY PERFORMANCE INDICATORS IN 7 BIG WINS (2)

KPI 2017UNIT BASELINE NNPC 2016 REPORT

INCREASE CRUDE OIL PRODUCTION

INCREASE GAS PRODUCTION

INCREASE GAS TO POWER

INCREASE REFINING CAPACITY ANDLOCAL PRODUCTION

mmbbls/d

bscfd

mmscfd

-

1.6

7.2

536

-

1.8

7.1

517.92

13.75%

2.2

8.2

800

Begin Repairsunder private

sector

COMPARING THE 7 BIG WINS WITH THE NNPC 2016 REPORT

NNPC 2016 REPORT

22

FINAL THOUGHTS

While it is obvious that the top brass of NNPC are working hard to ensure the oil and gas industry in Nigeria sheds its previous reputation for corruption and opaqueness, The corpora-tion must go beyond its current level of transparency by ensuring that it is more comprehen-sive, timely, accurate and accessible in its operations.

It might bene�t Nigeria to look at other countries and how they have been able to avoid the crude curse that distresses the nation’s economy and apply similar techniques back home.

1

23

Why the corporate headquarters and re�neries are performingso poorly in terms of �nancials.

Why the crude sales proceed don't match the crude payment receipts.

Why 0.95 million barrels of crude oil is still being processed under swap productsarrangements.

4 Why NNPC cannot make remittance of dollar payment to FAAC every month.

WE ARE INTERESTED IN DISCOVERING;

Following the passage of the Petroleum Industry Governance Bill (PIGB), it is our desire that the new entities created to take over from the existing NNPC will give a better performance than their predecessors. However, could this simply be a case of pouring old wine into a new bottle? That remains to be seen.

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