Nigeria Extractive Industry Transparency Initiative (NEITI) released its new audited report few days which showed Nigeria recorded a 55 percent increase of $32.63 billion from the oil and gas sector in 2018.
Here are eight major takeaways from the report.
Delay in remitting proceeds from net domestic crude sales
The audited NEITI admitted that It is evident that the Nigeria National Petroleum Corporation (NNPC) consistently delayed in remitting sales proceeds from crude oil proceeds to the federation account. The delay sometimes ranges from 21 days to 55 days.
NEITI estimated the opportunity cost of the delay to around N17.5 billion while also recommended that the NNPC remits into the CBN/NNPC Crude Oil and Gas Revenue Naira accounts every month.
Unnecessary deduction
A total of N889.531 billion was deducted from the domestic sales proceeds in 2018. These deductions include N722.257billion for under-recovery of imported petroleum products, N28.329billion for crude and product losses and N138.945billion for pipeline repairs and maintenance cost. This represents 39percent of the N2.295 trillion total domestic sales for 2018.
Outstanding Liabilities
The report reveals that many companies had outstanding liabilities as at 2018- year-end while also noting that the nonpayment of these funds as at when due resulted to a revenue loss to the Federation (in both absolute terms and opportunity cost on commercial terms).
NEITI recommended that respective government agency intensify efforts to recover the debt.
Crude oil theft increased by 46%
In 2018, Nigeria lost a total of 53.281million barrels valued at $3.837billion (applying an average price of $72.01) to crude oil theft and sabotage. This is an increase of 46.15percent when compared to 2017 volumes of 36.457million barrels.
For instance, SPDC lost about 57 percent of its total production of 62 billion barrels in 2018 to crude oil theft, Chevron lost about 2.6 billion barrels from its production 62.8 billion barrels.
Seplat lost about 1.7 billion barrels from its total 2018 oil production of 8.7 billion while NewCross lost about 1.1 billion barrels from its total oil production of 6.1 billion.
Joint Venture gathers momentum
A further breakdown shows that the JVs contributed to the highest production of 315 million barrels, followed by Production Sharing Contracts (PSCs) which achieved 270.6 million barrels. Others like Sole Risk, Marginal Fields and Service Contracts accounted for 92.2. million barrels, 22 million barrels and 1.3 million barrels respectively.
The report also shows that the total crude oil production for 2018 was 701 million barrels which increased by 1.5percent when compared with the 690 million barrels achieved in 2017.
Under-utilization of the National Refineries
NEITI said the refineries operated at only eight percent of installed capacity in 2018 while also recommending that the Federal Government should evolve innovative ways of optimizing the utilization of existing refineries.
Crude Oil Sales Proceeds from NNPC
Crude Oil Sales Proceeds From the total crude oil volume of 255.546 million barrels lifted by NNPC in 2018, actual sales were 255.313million barrels valued at US$18.184 billion.
“The difference of 233 thousand barrels between volume lifted and actual quantities sold has been explained as sales accounted for in 2019,” NEITI said in its report.
Revenue from export crude oil almost double
Thanks to the higher oil price, Nigeria realized almost twice of what it made last year of $4.022billion (2017: $2.721billion) from the sales of federation export crude oil of 55.858million barrels (2017: 50.246million barrels).
From the total export sales proceeds of $3.7billion received in 2018, 95.36% ($$3.577billion) went to various JV Proceeds accounts for the funding of Cash-call.
The balance of 4.6% (US$174.175million) paid into JP Morgan Chase crude oil revenue (dollar) account which was eventually swept to the Bank for International Settlements for onward transfer to the Federation account.
In addition to the sales’ proceeds, $217.813million was earned in the year from Insurance Claims, SPDC/ NNPC JV-Ullage Revenue, Over Riding Royalty Interest among others.
