By Toyin Akinosho
NNPC’s 62.35% owned gas delivery subsidiary N-Gas recorded a leap in profit from $6.217Million in 2019 to $9.532Million in 2020.
Most of the profit came, not from gas delivery, but from difference in Finance cost between 2019 and 2020, according to 2020 Annual report by N-GAS, one of the 21 NNPC subsidiaries whose audited reports were published in September 2021.
Finance cost was higher in 2019: $5.13Million, than in 2020: $1.88Million. This made all the difference in terms of profit after tax in 2020.
In terms of gas delivery itself, 2020 volumes were slightly lower than 2019 supplies, but that reflected extensive pigging operations in the pipeline in the first few months of the year.
N-Gas is jointly owned with NNPC by Chevron and Shell and its work is to purchase and deliver Nigerian gas to customers in Benin Republic, Togo and Ghana, through the West African pipeline.
This means that it pays upstream suppliers like NDWestern and NPDC for taking their gas and pays the pipeline owners for ferrying the gas through the line.
The bulk of the revenue should be from the delivery charges on sale of gas to Volta River Authority (VRA) and Communaute Electrique du Benin- Lome/ Cotonou (CEB) under their respective gas sales agreements, but that’s not what happened.
N-Gas Limited was incorporated in 2004 as a private limited liability Company. The Company is jointly owned by the Nigerian National Petroleum Corporation (62.35%), Chevron N-Gas Limited (20.00%) and Shell Overseas Holdings Limited (17.65%). The Company’s main activity is to buy and sell natural gas shipped through the Escravos-Lagos Pipeline System (ELPS – NGC) and the West African Gas Pipeline (WAGP) to its customers in the countries of Ghana, Togo and Benin.
N-Gas has executed agreements with upstream producers in Nigeria (Chevron Nigeria Limited Joint Venture (CNL-JV) and Nigerian Petroleum Development Company/ND Western Joint Venture (NPDC/NDW-JV)) and with gas transportation companies (Nigerian Gas Company Limited (NGC) and West African Petroleum Company (WAPCo) ) for the supply and transportation of gas to its customers. The agreement with NPDC/NDW-JV was previously with Shell, ie SPDC-JV but subsequently novated to NPDC/NDW-JV following the divestment of Shell Petroleum Development Company Joint Venture (SPDC-JV) from the asset that is the source of its upstream gas supplies to N-Gas. The Novation agreement which transferred the rights and obligations of the NNPC/SPDC JV parties to NPDC/NDW JV parties in the NNPC/SPDC GPAs, was finally concluded in December 2014 following the execution of the novated Trust Accounts and Security Deeds (TASDs),
The dividend paid to shareholders in 2020 was $6Million, same as in 2019. In both years, NNPC received $3.741Million as dividend; Chevron received $1.2Million and Shell received $1.059Million.