NNPC’s Project Funding Shortfall, JV Cost Recovery Hit $1.84tn in July

•OPEC may leave supply volume unchanged for September

Emmanuel Addeh

The Nigerian National Petroleum Corporation (NNPC) underfunded its priority projects and under-serviced its Joint Venture (JV) obligations to the tune of $1.84 trillion in July, latest report from the national oil company has indicated.

While the projected amount of $536 million was budgeted for cost recovery and government priority projects per month, rounding off at $3.7 billion for the year, actual dollar funding was $1.911 trillion as of July this year, leaving a deficit of $1.84 trillion.

A breakdown of the figures released by the national oil company showed that in January, funding was $276.4 million, it was $252.9 million in February, $307.6 million in March and was $239.2 million in April.

In addition, NNPC funded the projects and its JV obligations to the tune of $392.2 million in May, $202 million in June, while it hit $240.6 million in the month under review.

Shortfall in funding was $259.6 million in January, $283.1 million in February, $228.3 million in March, $296.7 million in April, $143.8 million in May, $333.7 million in June, and $295.3 million in July.

According to the report, some of the government’s priority projects include the Excravos-Lagos pipeline expansion phase 1 and 11, Odidi-Warri expansion pipeline, gas supply to Egbema, Ogidigben gas city and the Obiafu/Obrikom-Oben project. Others include the Trans-Sahara gas pipeline, West Niger Delta project, Egbin gas project, Sapele metering station, upgrade of Oben metering project, and Gbaramatu gas supply facility.

In all, the report showed that crude oil export sales increased by two per cent to hit 178,185,000 barrels, while domestic crude oil production due in September was 8.4 million barrels, an increase of 98 per cent compared to the previous month.

According to the report, JV cash call arrears stood at $1.46 billion, with total payment to date being $3.22 billion out of the total negotiated debt of $4.68 billion, although Mobil Producing Nigeria’s debt of $833 million had been fully paid.

Monies from crude oil and gas sales were paid by 13 companies, including Bono, Duke, an NNPC subsidiary, Mocoh, Cepsa, Sahara Energy, and MRS, it stated. Furthermore, the quantity of crude sold by the companies was 6.8 million barrels at a unit price of $65.7, totalling an equivalent of N171.3 billion, and royalties of N32.8 billion.

Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC), with its allies (OPEC+), may likely keep its oil output policy unchanged when the group meets tomorrow and continues with its planned modest production increase. This was revealed yesterday.

OPEC and allies, including Russia, collectively known as OPEC+, would meet on September 1, to discuss the previously agreed increase of 400,000 barrels per day (bpd) for the next several months.

US President Joe Biden’s administration had urged OPEC and its allies to boost oil output to tackle rising gasoline prices that it viewed as a threat to the global economic recovery.

On Monday, Brent was down 16 cents or 0.2 per cent at $72.54 a barrel, but rose more than 11 per cent last week in anticipation of disruptions to oil production from Hurricane Ida.

But OPEC+ sources said the recent rise in oil prices was temporary, driven mainly by disruption of supply in Mexico and the severe storm hitting the U.S. Gulf Coast over the weekend.