Oil
Nigerian factor hits Total production, profits
LONDON – French giant Total saw profits fall in 2012, despite a rise in revenue, as impairments hit the company’s bottom line.
The company said flooding in Nigeria, disruptions related to security conditions in Yemen and the shut-down of production in Syria, as well as natural field decline and turnarounds added to the fall in output and offset the increased production from the start-up and ramp-up of new projects.
It posted a profit of €10.8 billion ($14.5 billion) for the year, down 13% on the nearly €12.3 billion profit booked in 2011.
Hitting the company’s profits were special items which had a negative effect on net income of €1.5 billion last year, which included, amongst other items, an impairment of assets in the Barnett play in the US, provisions for abandonment costs relating to Elgin in the UK and a one-off tax of 4% on petroleum stocks in France.
The after-tax inventory effect also had a negative result on net income of €157 million, compared to a positive effect of €834 million the previous year.
Total said changes in fair value also had a negative effect on net income in 2012 of €7 million, compared to a positive effect of €32 million a year earlier.
These factors offset an 8% jump in sales which totaled nearly €200.1 billion for 2012, compared to just under €184.7 billion a year earlier.
Adjusted net income however, which excludes the after-tax inventory effect, special items and the effect of changes in fair value, was up 8% year-on-year at nearly €12.4 billion.
The majority of that figure came from the upstream business segment which posted an adjusted net income of almost €11.2 billion, up from €10.6 billion 2011.
A rise in liquids and gas price realisations during the year helped offset a fall in production for Total’s upstream business segment in 2012.
The average hydrocarbon price rose 3%, to an average of $77.3 per barrel of oil equivalent, compared to an average of $74.9 per barrel in 2011.
This helped partially offset a 2% decline in production last year which averaged 2.3 million barrels of oil equivalent per day.
Besides the Nigerian factors, Total attributed the fall in production to last year’s blow out on the G4 well at the Elgin field off the UK which led to a major gas release and resulted in the field being shut-in since March.
Total chairman Christophe de Margerie said the company was continuing to progress towards meeting its three main objectives.
“To successfully start-up projects, on time and in budget, for the group’s profitable growth over the coming years,” he said.
“To rely on a recently expanded exploration portfolio for more significant discoveries. And finally, to continue the restructuring of downstream activities for improved profitability and resilience in an evolving market.”
Total reaffirmed its production growth target for a 3% year-on-year increase between the period from 2011 to 2015.
It added that production in 2013 would be driven by projects which started up last year as well as the planned start-up this year of Anguille in Gabon, the Angola liquefied natural gas project, Kashagan in Kazakhstan and the extension of OML 58 in Nigeria.
The company also said it exploration budget would be increased this year to $2.8 billion as it looks to drill prospects in the Ivory Coast, Gabon, Kenya and Brazil.
The Nigerian National Petroleum Company Limited (NNPC) has unveiled a bold strategy to reduce methane emissions in the oil and gas sector by 60% by 2031, with an ultimate goal of achieving net-zero emissions by 2060.
This announcement reinforces Nigeria’s leadership role under the Global Methane Pledge initiative and its commitment to tackling climate change.
The Group Chief Executive Officer of NNPC, Mele Kyari, disclosed these plans during a meeting on Thursday with Robert Leahman, the U.S. State Department’s Global Methane Program Manager, and a delegation from Deloitte.
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The discussions, held at the NNPC Towers in Abuja, focused on collaborative efforts to reduce methane emissions through innovative and sustainable practices.
“Reducing methane emissions is not just an environmental necessity but also a strategic imperative for Nigeria’s energy transition. We are leveraging partnerships to adopt global best practices and innovative solutions,” Kyari stated.
Key among these efforts is a pilot project in the Niger Delta, aimed at establishing emissions baselines, mitigating methane leaks, and promoting sustainable operations across Nigeria’s energy sector.
The project, a partnership between NNPC, Deloitte, and the U.S. Bureau of Energy Resources, will utilize data-driven methodologies to pinpoint and address methane hotspots.
Robert Leahman commended Nigeria’s proactive stance, describing it as a benchmark for other nations on the continent.
“Nigeria’s leadership under the Global Methane Pledge sets a standard for the continent. These initiatives will not only help reduce emissions but also drive sustainable development in the energy sector,” he said.
Kyari highlighted the broader benefits of addressing methane emissions, noting its significance for both environmental protection and economic efficiency.
“This collaboration is a game-changer. By addressing methane leaks, we’re reducing waste, saving costs, and protecting the environment. It’s a win-win for our economy and the planet,” he added.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
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