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Home Sectors Energy

Petrol supply drops by 21%, NNPC gives reasons for high production cost

Chike Olisah by Chike Olisah
June 16, 2020
in Energy
Mele Kyari, NNPC, NNPC spends estimated N33.60/litre on petrol subsidy, NNPC vows to be transparent, set to publish details of petroleum product supplies , OML 119: NNPC record 14 bids for development of oil well, This NNPC initiative aims to solve the problem of tanker explosions , Fluctuations of oil price threatening Nigerian content development — NNPC , Lagos pipeline leak contains water, not petrol- NNPC, NNPC gives condition for relocation of tank farms and depots from residential areas , NNPC to cultivate 2,675 hectares of cassava for Ethanol production, Key performance highlights of NNPC for 2019 FY

Mele Kyari of NNPC.

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The nationwide lockdown and restriction which was implemented by the government as part of an effort to curtail the spread of the coronavirus disease have impacted the consumption of premium Motor Spirit (PMS) otherwise known as petrol in Nigeria as the supply of the product dropped in the last 2 months.

Available data from the Department of Petroleum Resources (DPR) that was released on Sunday, June 14, 2020, shows that the supply of petrol across the country dropped by 20.6 per cent to 1.43 billion litres in May 2020, from the 1.8 billion litres that were recorded in March 2020.

This was disclosed by the Director/Chief Executive Officer of DPR, Sarki Auwalu while speaking at the Future Energy Leaders Nigeria, live webinar, organized by the World Energy Council. He said that the supply of petrol had dropped by 25 per cent to 1.350 billion litres in April, before rising by 5.93 per cent to 1.43 billion litres in May.

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This translated to average daily petrol supply of 58.06 million litres in March; 45 million litres per day in April and 46.13 million litres per day in May 2020.

He also disclosed that diesel supply which was 600 million litres at the end of March, dropped by 33.33 per cent to 400 million litres for April, and remained at the same level in May.

On the other hand, Auwalu disclosed that Nigeria’s crude oil and condensate production stood at 68 million barrels in March; 66 million barrels in April and 58 million barrels in May, while the country exported 61 million barrels of crude oil and condensate in March 2020; 62 million barrels in April and 56 million barrels in May.

The DPR boss pointed out that the crisis in the oil market which was triggered by the pandemic had brought to the fore the need for efforts to be geared towards bringing down the cost of producing a barrel of crude oil, ensure business efficiency and financial stewardship, as well as the adoption of good corporate governance.

He said that the Federal Government decided to conduct the marginal field bid rounds during this period of COVID-19 pandemic due to the need to produce crude oil at a lower cost because there is no exploration cost.

Also speaking, Group Managing Director of the NNPC, Mallam Mele Kyari, disclosed that personnel and logistics costs were the highest cost elements in crude oil and gas production, as they contribute up to 7% and 35% respectively to the costs.

Kyari noted that other factors responsible for the high cost of production included issues bordering on security and losses on crude oil pipelines.

On his part, Mr. Bayo Ojulari, Managing Director of Shell Nigeria Exploration and Production Company (SNEPCO), emphasized the need for transparency around open book economies, while he lamented that security of facilities in the country is negatively impacting on efforts by oil firms to cut cost.


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Tags: NNPCPetrolShell Nigeria Exploration and Production Company
Chike Olisah

Chike Olisah

Chike was a banker with over 11 years experience in retail and commercial banking, risk management, treasury portfolio management and relationship management. He also acquired some experience in financial management and do have some special interest in investment analysis and personal finance. He had stints with financial institutions like the former Intercontinental Bank and Fidelity Bank.

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