The Nigerian Extractive Industries Transparency Initiative (NEITI)… has published a pilot report on Nigeria’s oil and gas commodity trading for 2017. These are major highlights of the report.

Nigeria made $13.17billion from crude oil sales

Citing data obtained from the NNPC, NEITI said the total receipts from the crude oil sales amounted to $13.17 billion for the fiscal year 2017. The crude oil sales are made up of 44% of Federal domestic deliveries while the FIRS, federation exports, third party financing and DPR deliveries represent 24%, 21%, 7 % and 4% respectively. The report said 692 million barrels of crude oil was produced.

“We noted that oil sales dropped significantly during 2016, which is mainly due to the pipeline vandalism in the Niger-Delta during this period, leading to a significant reduction in the production of fields owned by NPDC from 36,106,726 bbl. in 2015 to 17,017,458 bbl. in 2016.

“This production increased in 2017 to 34,302,513 bbl. as a result of successes recorded in repairs of vandalised pipeline in the Niger-Delta and resumption of crude oil lifting activities at the Forcados Terminal,” the report said.

Nigeria sold $1.3 billion worth of gas in 2017

NEITI reports that the Gas sales are made up of 77% of NLNG feed gas sales while LPG/NGL, EGTL/EGP and NGCL represent 18%, 3% and 2% respectively. NNPC sells the feed gas associated to the crude oil production to NLNG, which uses it for the liquefied natural gas (LNG) and natural gas liquids (NGL) production.

The report clarifies destination for Nigeria’s gas. Nigeria’s natural gas is exported mostly through NLNG plant and West African Gas Pipeline which was built to supply gas to some ECOWAS countries which includes Ghana, Benin and Togo. Exports are carried out through a pipeline with an initial utilisation capacity of 200 mmcf/d which is expected to increase to about 460 mmcf/d by 2026.

Refineries may be failing but keep getting crude 

According to the report, 25 percent of domestic crude oil worth over $1.4 billion was allocated to local refineries which can barely function at 10 percent utilisation capacity. The crude oil sent to the refineries is pumped from the terminals to the refineries located at Warri, Kaduna and two in Port Harcourt.

A breakdown of the crude delivered to the refineries within the period showed that Port Harcourt refineries received the largest allocation amounting to 18.04 billion barrels worth about $989.02 million or 68% of the total allocations.

Nearly 70% of domestic crude goes to subsidy

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Since Nigeria’s refineries are unable to meet local consumption, Nigeria exports a large portion of its allocated crude for domestic use in exchange for petrol and kerosene and in 2017 as much as 70 percent of the crude went to the Direct Sales Direct Purchase arrangement used to sell crude.

“We understand that the DSDP arrangements are mainly trading transactions by which NNPC receives oil products and delivers crude oil,” says the NEITI report.

  The crude exchanged amounted to 72 million bbl and the details of these transactions. The remaining quantity was exchanged following the SWAP agreements with DUKE Oil (total quantity exchanged is 3,795,543bbl) and TOTALSA (total quantity exchanged is 948,928bbl) and the unutilised crude oil was ultimately exported by NNPC.

NNPC, oil companies fail to meet NEITI’s reporting standards

NEITI admitted in its report that with regards to the sales of crude oil, sixty-six companies out of a total of seventy-three companies included in the reconciliation scope did not submit their reporting templates.

“Therefore, we were unable to reconcile 81.46% of NNPC’s crude oil sales. Furthermore, only one company submitted the template on its gas purchases from NNPC which implies that 99.89% of NNPC’s gas sales were not reconciled.”

NEITI also said that many companies did not comply with reporting formats. The companies included in the reconciliation scope were requested to submit a reporting template signed by the Chief Financial Officer or Chief Executive Officer. The templates were to be stamped using the company stamp, audited financial statements were to be attached to the reporting templates and the company’s external auditors were to certify (sign and stamp) that the accruals-based audited report ties in with the amount reported by the company and that the company’s audit report was prepared in accordance with international auditing standards.

“We noted that not all the companies selected in the reconciliation scope complied with those reporting instructions.

Government agencies also flouted this rule. “We noted that NNPC did not comply with those reporting instructions.” NEITI said.

 

 

Isaac Anyaogu is an Assistant editor and head of the energy and environment desk. He is an award-winning journalist who has written hundreds of reports on Nigeria’s oil and gas industry, energy and environmental policies, regulation and climate change impacts in Africa. He was part of a journalist team that investigated lead acid pollution by an Indian recycler in Nigeria and won the international prize - Fetisov Journalism award in 2020. Mr Anyaogu joined BusinessDay in January 2016 as a multimedia content producer on the energy desk and rose to head the desk in October 2020 after several ground breaking stories and multiple award wining stories. His reporting covers start-ups, companies and markets, financing and regulatory policies in the power sector, oil and gas, renewable energy and environmental sectors He has covered the Niger Delta crises, and corruption in NIgeria’s petroleum product imports. He left the Audit and Consulting firm, OR&C Consultants in 2015 after three years to write for BusinessDay and his background working with financial statements, audit reports and tax consulting assignments significantly benefited his reporting. Mr Anyaogu studied mass communications and Media Studies and has attended several training programmes in Ghana, South Africa and the United States

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