Newsletter Date N N P C G R O U P Energy in Brief

Moving forward, together

Mega Filling Stations Hotlines

Members of the public can provide useful

feedback and intelligence on operations of our

Mega and affiliate filling stations nationwide.

08057008021 08052195801 08100941174

February, 2016 Edition, Vol. 3

»

NNPC commences direct sale of crude for

refined petroleum products

In order to optimize high value return for Nigeria,

the previous off-shore crude oil exchange for prod-

uct arrangement by NNPC would be replaced with

the direct sales of crude and direct purchase of re-

fined petroleum products by NNPC with effect

from March, 2016.

The new arrangement when fully in place will cre-

ate opportunities for Nigerian businesses to partner

with NNPC in storage, marketing and distribution.

Nigeria is expected to save over 1 billion dollars in

revenue. While stressing the advantage of the new

arrangement, Minister of State for Petroleum Re-

sources and the GMD of NNPC, Dr Ibe Kachikwu

says transparency and accountability are key attrib-

utes of the new arrangement.

In January 2016, the Federal Government adopted a

price modulation approach to capture full value of

the fall in oil prices, the effect of which has result-

ed in appreciable revenue savings due to zero subsi-

dy claim for imported petroleum products.

The Federal Government had in 2015 spent 1.1 tril-

lion naira on fuel subsidy.

Content

Cover Page:

Page 2

Page 3

Page 4

NNPC DSDP

arrangement

Business Brief

Industry Watch

Sideline Stories

Twitter@NNPCgroup www.facebook.com/NNPCgroup

Newsletter Date N N P C G R O U P Energy in Brief

Moving forward, together

Mega Filling Stations Hotlines

Members of the public can provide useful

feedback and intelligence on operations of our

Mega and affiliate filling stations nationwide.

08057008021 08052195801 08100941174

February, 2016 Edition, Vol. 3

»

NNPC commences direct sale of crude for

refined petroleum products

In order to optimize high value return for Nigeria,

the previous off-shore crude oil exchange for prod-

uct arrangement by NNPC would be replaced with

the direct sales of crude and direct purchase of re-

fined petroleum products by NNPC with effect

from March, 2016.

The new arrangement when fully in place will cre-

ate opportunities for Nigerian businesses to partner

with NNPC in storage, marketing and distribution.

Nigeria is expected to save over 1 billion dollars in

revenue. While stressing the advantage of the new

arrangement, Minister of State for Petroleum Re-

sources and the GMD of NNPC, Dr Ibe Kachikwu

says transparency and accountability are key attrib-

utes of the new arrangement.

In January 2016, the Federal Government adopted a

price modulation approach to capture full value of

the fall in oil prices, the effect of which has result-

ed in appreciable revenue savings due to zero subsi-

dy claim for imported petroleum products.

The Federal Government had in 2015 spent 1.1 tril-

lion naira on fuel subsidy.

Content

Cover Page:

Page 2

Page 3

Page 4

NNPC DSDP

arrangement

Business Brief

Industry Watch

Sideline Stories

Twitter@NNPCgroup www.facebook.com/NNPCgroup

Brief

2015 NNPC Group Financial

Performance

FAAC Payments

update

Business

All figures are unaudited.

For more information on NNPC YTD performance,

Visit: http://nnpcgroup.com/NNPCBusiness/BusinessInformation/PerformanceData/MonthlyPerformanceData.aspx

2

A cumulative YTD deficit stands at ₦292 billion

₦1.095 Trillion

Equity Crude

& MF ORRI

Crude oil & Condensate Export for November, 2015 :Who gets what?

NNPC Equity

IOC Equity

IOC Shared Oil

IOC Carry Oil

IOC Equity

Balance of NNPC Equity

NNPC Equity

IOC Equity

Lifted by Partner

Lifted by NNPC

Lifted by NNPC

DPR

FIRS

Federation Account

Lifted by Partner

Lifted by NNPC for DPR, FIRS & Fed. Accounts with CBN

Alternative

Funding/MCA

Third Party

Financed

JV

Royalty Oil

Tax Oil

NNPC Profit Oil

PSC

65.49 million barrels of crude oil was lifted in November, 2015 by all parties: NNPC, Joint Venture

partners and Independent Operators…

Note: 61.09% of Y TD NNPC deficit is mainly accounted for by

claimable Pipeline repairs/management cost of ₦103.48Bn and Crude

& Product losses of ₦59.71Bn due to vandalized pipelines. Group Ex-

pense, Surplus/Deficits now included for NPDC Royalty.

Twitter@NNPCgroup www.facebook.com/NNPCgroup

Brief

2015 NNPC Group Financial

Performance

FAAC Payments

update

Business

All figures are unaudited.

For more information on NNPC YTD performance,

Visit: http://nnpcgroup.com/NNPCBusiness/BusinessInformation/PerformanceData/MonthlyPerformanceData.aspx

2

A cumulative YTD deficit stands at ₦292 billion

₦1.095 Trillion

Equity Crude

& MF ORRI

Crude oil & Condensate Export for November, 2015 :Who gets what?

NNPC Equity

IOC Equity

IOC Shared Oil

IOC Carry Oil

IOC Equity

Balance of NNPC Equity

NNPC Equity

IOC Equity

Lifted by Partner

Lifted by NNPC

Lifted by NNPC

DPR

FIRS

Federation Account

Lifted by Partner

Lifted by NNPC for DPR, FIRS & Fed. Accounts with CBN

Alternative

Funding/MCA

Third Party

Financed

JV

Royalty Oil

Tax Oil

NNPC Profit Oil

PSC

65.49 million barrels of crude oil was lifted in November, 2015 by all parties: NNPC, Joint Venture

partners and Independent Operators…

Note: 61.09% of Y TD NNPC deficit is mainly accounted for by

claimable Pipeline repairs/management cost of ₦103.48Bn and Crude

& Product losses of ₦59.71Bn due to vandalized pipelines. Group Ex-

pense, Surplus/Deficits now included for NPDC Royalty.

Twitter@NNPCgroup www.facebook.com/NNPCgroup

Business brief contd.

3

Business Intervention

Programmes

Organizational restructuring in-

tended to improve performance

will be anchored on four autono-

mous business units with a lean

CHQ.

Renegotiated OPA contract and

initiated crude direct sales and

direct purchase of petroleum

products for value addition.

Total value of 80.34 billion naira

was received as sales revenue for

petroleum products in the month

of December,2015 compared

with 66.96 billion naira received

in the month of November, 2015.

Ensures uninterrupted fuel supply

through improved product import

storage and distribution across

the country.

Key Achievements Key Challenges

Securing national crude oil and

products pipelines across the coun-

try remained a significant challenge

to NNPC operations. 2,832 vandal-

ized points recorded from January

to December, 2015, resulting in a

loss of 59.71billion naira of crude

and products value.

Pushing for reforms in the refineries

and implementation of new business

model is essential to attaining

greater refinery performance. Industry Watch

NNPC cost control key to

our reform-Kachikwu

An important element of the

NNPC reform programme under

the 20 Fixes Restructuring is on

cost reduction and maximization of

opportunities. To this end, and in

pursuit of this objective, NNPC

and its JV partner Chevron signed

an epoch project financing ar-

rangement that would significantly

impact on oil and gas project fi-

nancing especially in Africa and

the Middle East. The 1.2 billion

dollar multi-year drilling financing

would cover 23 onshore and 13

offshore wells on Oil Mining Leas-

es 49, 90, and 95 covering the year

2015-2018.

The objective of the alternative

project financing is to help miti-

gate production decline and en-

hance oil and gas production.

China’s imported oil increased to

over 60 percent last year amid

falling oil prices and steadily-

growing domestic energy de-

mand.

China imported 328 million tons

of oil, up 6.4 percent, accounting

for 60.6 percent of China's total

oil consumption in 2015. Oil con-

sumption rose 4.4 percent to 534

million tons during the same peri-

od, a report released by the Eco-

nomics & Technology Research

Institute of China National Petro-

leum Corporation, stated.

According to the report, China’s

reliance on foreign crude will in-

crease to 62 percent this year

(2016) with total imports estimat-

ed at about 357 million tons.

Crude demand will rise by 4.3

percent to 566 million tons during

the same period.

But some experts have said, the

expanding oil imports pose risks

to the country's energy security.

Analysts believe that by 2020,

nearly 65 percent of the oil con-

sumed in China will have to be

imported. China is not only the

world's largest oil buyer and con-

sumer, but also a seller of refined

oil. As a result, it is estimated

that exports of China refined oil

will increase 31 percent to 25 mil-

lion tons this year.

Slump in oil prices fuels increase in China's

crude imports

Twitter@NNPCgroup www.facebook.com/NNPCgroup

Business brief contd.

3

Business Intervention

Programmes

Organizational restructuring in-

tended to improve performance

will be anchored on four autono-

mous business units with a lean

CHQ.

Renegotiated OPA contract and

initiated crude direct sales and

direct purchase of petroleum

products for value addition.

Total value of 80.34 billion naira

was received as sales revenue for

petroleum products in the month

of December,2015 compared

with 66.96 billion naira received

in the month of November, 2015.

Ensures uninterrupted fuel supply

through improved product import

storage and distribution across

the country.

Key Achievements Key Challenges

Securing national crude oil and

products pipelines across the coun-

try remained a significant challenge

to NNPC operations. 2,832 vandal-

ized points recorded from January

to December, 2015, resulting in a

loss of 59.71billion naira of crude

and products value.

Pushing for reforms in the refineries

and implementation of new business

model is essential to attaining

greater refinery performance. Industry Watch

NNPC cost control key to

our reform-Kachikwu

An important element of the

NNPC reform programme under

the 20 Fixes Restructuring is on

cost reduction and maximization of

opportunities. To this end, and in

pursuit of this objective, NNPC

and its JV partner Chevron signed

an epoch project financing ar-

rangement that would significantly

impact on oil and gas project fi-

nancing especially in Africa and

the Middle East. The 1.2 billion

dollar multi-year drilling financing

would cover 23 onshore and 13

offshore wells on Oil Mining Leas-

es 49, 90, and 95 covering the year

2015-2018.

The objective of the alternative

project financing is to help miti-

gate production decline and en-

hance oil and gas production.

China’s imported oil increased to

over 60 percent last year amid

falling oil prices and steadily-

growing domestic energy de-

mand.

China imported 328 million tons

of oil, up 6.4 percent, accounting

for 60.6 percent of China's total

oil consumption in 2015. Oil con-

sumption rose 4.4 percent to 534

million tons during the same peri-

od, a report released by the Eco-

nomics & Technology Research

Institute of China National Petro-

leum Corporation, stated.

According to the report, China’s

reliance on foreign crude will in-

crease to 62 percent this year

(2016) with total imports estimat-

ed at about 357 million tons.

Crude demand will rise by 4.3

percent to 566 million tons during

the same period.

But some experts have said, the

expanding oil imports pose risks

to the country's energy security.

Analysts believe that by 2020,

nearly 65 percent of the oil con-

sumed in China will have to be

imported. China is not only the

world's largest oil buyer and con-

sumer, but also a seller of refined

oil. As a result, it is estimated

that exports of China refined oil

will increase 31 percent to 25 mil-

lion tons this year.

Slump in oil prices fuels increase in China's

crude imports

Twitter@NNPCgroup www.facebook.com/NNPCgroup

© NNPC GROUP Energy in Brief, 2016

S ideline stories

Nigerian Airforce to partner NNPC

on pipelines surveillance drone

Nigerian Airforce has indicated its interest to

partner with NNPC to enhance pipeline secu-

rity across the country.

Making a presentation on its prototype drone

surveillance aircraft to the management of

NNPC, the Nigerian Airforce said the Aircraft

is built on home based technology that ad-

dresses the peculiarity of the Nigerian terrain.

It solicited NNPC to partner with it to support

the manufacturing of the aircraft on need ba-

sis. The craft code named Gulma, is the first

indigenous unmanned aerial vehicle, UAV

built by the Nigerian Airforce. It has the ca-

pacity to fly for 12 hours of surveillance oper-

ations with crew and state of the art radio and

video communication.

Speaking, the Minister of State for Petroleum

Resources and the Group MD, of the NNPC,

Dr. Ibe Kachikwu, represented by the Group

Executive Director, Commercial and Invest-

ment Dr. Babatunde Adeniran expressed

confident on the ability of the Nigerian Air

force to support NNPC in curbing the men-

ace of pipeline vandalism in the country.

In a bit to fully appraise

the monumental challenges

facing the distribution of

petroleum products across

Nigeria, the Minister of

State for Petroleum Re-

sources and the GMD of

NNPC Dr. Ibe Kachikwu

together with senior man-

agement staff of the Cor-

poration undertook a facil-

ity tour of storage and dis-

tribution installations at

the Robert Island in Lagos.

The Island is a major re-

ceiving terminal for im-

ported petroleum products

that are pumped via pipe-

lines to major coastal stor-

age tanks in the country

for distribution across Ni-

geria.

The Minister was quick to

sum up his impression of

the visit: ‘What I have

seen here is amazing, very

frustrating and an eye

opener for the problem

NNPC is facing – I don’t

think Nigerians understand

the magnitude of the prob-

lems at hand- the more so-

lutions you bring the more

problems show up.’ Dr

Kachikwu, was reacting to

the large scale destructions

of oil pipelines and out-

right stealing of petroleum

products across the length

and breadth of the commu-

nity where oil facilities and

other critical infrastructure

lays.

Over, 2,832 vandalised

pipeline points have been

recorded in the country in

past twelve months dis-

rupting efforts at ensuring

steady supply and distribu-

tion of petroleum products

in the country.

Kachikwu expresses concern over pipelines

vandalism

4 All correspondence to: energy_inbrief@nnpcgroup.com

Minister of State for Petroleum Resources and the GMD of NNPC Dr.

Ibe Kachikwu together with GED C&I, Dr. Babatunde V. Adeniran

with senior security officials inspecting a major NNPC pipeline vandal-

ized on Robert Island in the Atlas Cove area in Lagos.

The Nigerian Airforce Unmanned Aerial Vehicle, (UAV)

code named Gulma.

© NNPC GROUP Energy in Brief, 2016

S ideline stories

Nigerian Airforce to partner NNPC

on pipelines surveillance drone

Nigerian Airforce has indicated its interest to

partner with NNPC to enhance pipeline secu-

rity across the country.

Making a presentation on its prototype drone

surveillance aircraft to the management of

NNPC, the Nigerian Airforce said the Aircraft

is built on home based technology that ad-

dresses the peculiarity of the Nigerian terrain.

It solicited NNPC to partner with it to support

the manufacturing of the aircraft on need ba-

sis. The craft code named Gulma, is the first

indigenous unmanned aerial vehicle, UAV

built by the Nigerian Airforce. It has the ca-

pacity to fly for 12 hours of surveillance oper-

ations with crew and state of the art radio and

video communication.

Speaking, the Minister of State for Petroleum

Resources and the Group MD, of the NNPC,

Dr. Ibe Kachikwu, represented by the Group

Executive Director, Commercial and Invest-

ment Dr. Babatunde Adeniran expressed

confident on the ability of the Nigerian Air

force to support NNPC in curbing the men-

ace of pipeline vandalism in the country.

In a bit to fully appraise

the monumental challenges

facing the distribution of

petroleum products across

Nigeria, the Minister of

State for Petroleum Re-

sources and the GMD of

NNPC Dr. Ibe Kachikwu

together with senior man-

agement staff of the Cor-

poration undertook a facil-

ity tour of storage and dis-

tribution installations at

the Robert Island in Lagos.

The Island is a major re-

ceiving terminal for im-

ported petroleum products

that are pumped via pipe-

lines to major coastal stor-

age tanks in the country

for distribution across Ni-

geria.

The Minister was quick to

sum up his impression of

the visit: ‘What I have

seen here is amazing, very

frustrating and an eye

opener for the problem

NNPC is facing – I don’t

think Nigerians understand

the magnitude of the prob-

lems at hand- the more so-

lutions you bring the more

problems show up.’ Dr

Kachikwu, was reacting to

the large scale destructions

of oil pipelines and out-

right stealing of petroleum

products across the length

and breadth of the commu-

nity where oil facilities and

other critical infrastructure

lays.

Over, 2,832 vandalised

pipeline points have been

recorded in the country in

past twelve months dis-

rupting efforts at ensuring

steady supply and distribu-

tion of petroleum products

in the country.

Kachikwu expresses concern over pipelines

vandalism

4 All correspondence to: energy_inbrief@nnpcgroup.com

Minister of State for Petroleum Resources and the GMD of NNPC Dr.

Ibe Kachikwu together with GED C&I, Dr. Babatunde V. Adeniran

with senior security officials inspecting a major NNPC pipeline vandal-

ized on Robert Island in the Atlas Cove area in Lagos.

The Nigerian Airforce Unmanned Aerial Vehicle, (UAV)

code named Gulma.