Federal govt earned $14.5 bn from crude oil, gas sale in 2017 — NEITI

Tankers at a NNPC depot
Tankers at a NNPC depot

Nigeria realised about $14.5 billion from the sale of the federation share of crude oil and gas produced in 2017, a report on a pilot study on commodity trading by Nigeria Extractive Industries Transparency Initiative (NEITI) disclosed.

The amount was realised from the sale of about 240.9 million barrels, or 35 per cent, allocated to the federation, out of a total volume of about 692 million barrels produced during the year.

The report said the revenue was made up of $13.18 billion, or 90.8 percent from crude oil, and $1.32 billion, or 9.1 percent from gas.

The 136-page report published on Thursday in Abuja followed a pilot study which focused on the sale of Nigeria’s share of crude oil and gas produced for the year. The report contains details and analysis of oil and gas production in 2017.

It also disaggregated the federation share of crude oil production by types, allocation, uses, details of the revenues derived from the sales, the receiving accounts, and allocation of the revenues.

Details of the buyers’ selection process, names of buyers/traders on Nigeria’s crude, destinations of the crude, the vessels details, bill of laden dates, pricing options, sale prices, and actual payments and dates, products supplied by type, cargo, supplier, supply date, volume, unit cost, demurrage, etc. were also included in the report.

According to the report, trend analysis showed that the 2017 federation share of crude oil production was about 4 percent higher than the 231.6 million barrels in the previous year. The figure was however lower by 19 percent than the 297.8 million barrels for 2015.

Indications are that while there was a slight improvement on the figure for 2016 (a year characterized by vandalism and sabotage of oil facilities), crude oil production for 2017 was about a fifth less than 2015 level.

Further details of the key findings from the study show that about 240.9 million barrels of federation share for 2017 was disaggregated into 105.9 million barrels, or 44 percent for domestic crude allocation, and 57.3 million barrels, or 24 percent as liftings for the Federal Inland Revenue Service.

About 50.2 million barrels or 21 percent was for export; 17.6 million barrels, or 7 percent for Third-Party Financing, and 9.9 million barrels, or 4 percent as crude oil liftings for the Department of Petroleum Resources.

Besides, the report said of about 105.9 million barrels of the domestic crude oil allocation for local refining, about 72.8 million barrels, or 69 percent went to the Direct Sale Direct Purchase (DSDP) arrangement. About 26.5 million barrels or 25 percent went the local refineries.

Similarly, about 4.7 million barrels or 4 percent was used for product exchange, with about 1.9 million barrels, or 2 percent, which was unutilized, exported.

NNPC Deduction

From the total revenue realised from the sale of the share of the Federation crude oil, the report said the NNPC deducted about N297 billion as costs and losses.

A breakdown of the figures involved showed about N141.6 billion was for under-recovery on petroleum products; about N25 billion for crude and product losses, and about N130.4 billion for pipeline repairs and maintenance.

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About N77.92 billion was recorded as under-remitted revenues by the NNPC to the Federation Account during the year.

“The NNPC acknowledges the under-remittance and states that there is an ongoing reconciliation to net off the N77.92 billion from “the established Federation indebtedness to the Corporation of N797billion arising from the KPMG forensic audit of the Corporation at the instance of the Federation,” the report said.

Report’s objective

The Executive Secretary of NEITI, Waziri Adio, said the report was undertaken in furtherance of the recent decision of the global Extractive Industries Transparency Initiative (EITI) to add commodity trading transparency to its scope of coverage through stand-alone and in-depth reports.

According to Mr. Adio, the report would ensure adequate returns to governments, increase competition and efficiency in commodity trading, and greater public scrutiny of the resultant revenues.

“Resource-rich countries receive shares of minerals produced in their territories as equity shares or as in-kind payments, and these minerals are usually sold directly or indirectly to commodity traders through state-owned enterprises,” he said.

“However, the process and details of these sales are mostly shrouded in secrecy, even when more than half of the revenues from the extractive sector comes from these sales.

“This is why the EITI resolved to beam more search-light on commodity trading. Nigeria is one of the five EITI-implementing countries selected to pilot this enhanced focus,” he added.

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