Crude oil sales proceeds by Nigerian National Petroleum Corporation (NNPC) surged 132% to $342.18 million last December – the second highest monthly earnings record in 2017. NNPC’s financial report for December 2017, which contains this information, shows a strong recovery in total crude oil and gas sales proceeds – which rose from $273 million in November to $447.7 million in December – the highest monthly revenue figure since August 2017.
Based on the revised figure of N147.8 million for crude oil sales proceeds in November, crude oil earnings had dropped by 35% in the month. Crude oil sales exclusively accounted for the growth in total oil and gas revenue in December, as gas sales dropped by 5.7% to $105.4 million during the month.
With the strong growth in December, crude oil and gas transactions in 2017 amounted to $3.85 billion, the report showed. Crude oil contributed 66% of the revenue while the balance came from gas sales.
Receipts of sales proceeds from both oil and gas grew significantly in December from $201 million in November to $476 million in December, according to the NNPC’s financial report. This represents the highest monthly receipts recorded in all of 2017. Total receipts for the year amounted to $3.59 billion of which 69% came from crude oil sales.
A total of $2.65 billion of the total receipts was applied to fund the JV cost recovery for the year to secure current and future productions. NNPC’s remittance to the federation account improved from $56.6 million in November to $87.8 million in December. The figure had fallen all the way from $121.75 million in October. The corporation remitted a total of $942.24 million to the federation account in the 2017 fiscal year.
The recovery in crude oil revenue was propelled by gains in crude oil price in the international market while the volume of NNPC’s crude lifting remained well below the August figure as at the end of November. Crude oil prices have remained upbeat since July, with spot price advancing $1.23 to $64.09/b in December. The OPEC reference basket averaged $62.06/b last December, a record unmatched any time since June, 2015.
Oil price outlook remains positive, riding on the back of market confidence on a firm stand of oil producers to stem supply glut. Strengthening global economic growth with the accompanying demand for oil also supports market confidence. A drop of 7.4 million barrels in US inventory in December, 2017 further reinforces the oil market rebalancing.
World economic growth estimates portray a healthy momentum at 3.7% for 2017. Economic growth in Euro-Zone, Japan and OECD is expected to be robust. China and India remain the growth drivers despite a slowdown in India. The increased momentum backs an upward revision of global oil demand growth to 1.57mb/d in 2017.
In Nigeria, economic recovery continues to accelerate with real GDP growth improving from 1.4% year-on-year in the third quarter of 2017 to 1.92% in the final quarter. This is a strong positive economic indicator for Nigeria.