The Nigerian National Petroleum Company Limited (NNPCL) recorded a decline in crude oil and condensate production in July, with output falling to 1.68 million barrels per day (mbpd) from 1.72 mbpd recorded in June. The July figure represents a 2.3 per cent month-on-month decline, driven largely by lower crude oil production. Crude oil output fell to 1.44 mbpd in July, from 1.47 mbpd in June, while condensate production declined to 0.24 mbpd from 0.25 mbpd.
NNPC attributed the decline to a combination of operational disruptions across several assets, facility outages, equipment unavailability, pipeline incidents and other production constraints. Natural gas production also declined during the month, falling from 7,841 million standard cubic feet per day (mmscf/d) in June to 7,489 mmscf/d in July, representing a 4.5 per cent drop. Similarly, gas sales fell by about 7.8 per cent, from 4,970 mmscf/d in June to 4,581 mmscf/d in July.
NNPC reported ₦3.087 trillion in revenue and ₦279 billion in profit after tax for July. The figures represent significant declines from the ₦4.389 trillion revenue and ₦535 billion profit after tax reported in June. The decline in production and revenue is a setback for NNPC’s efforts to increase output and profitability. The operational disruptions highlight the fragility of Nigeria’s oil and gas infrastructure.
The winners: none. The losers: NNPC, which has suffered a decline in production and revenue; and the Nigerian government, which relies on oil revenues.
Bottom Line: NNPC’s oil output fell in July. The decline is a setback for the sector. The question is whether the company can address the disruptions and restore production.