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Tag: NEITI

  • 36.5 million barrels of oil stolen in 2017 – NEITI

    36.5 million barrels of oil stolen in 2017 – NEITI

    It said Nigeria lost about 36.5 million barrels of crude oil to theft and sabotage in 2017, the Nigerian Extractive Industry Transparency Initiative has said.

    An analysis of the latest annual oil and gas report of the Nigeria Extractive Industries Transparency Initiative for the 2017 fiscal said the country witnessed a reduction in oil theft within the year.

    The report also stated that 69 million barrels of crude was lost due to decrease in production volumes resulting from routine maintenances or unplanned repairs of the production facilities.

    “This was regarded as a remarkable improvement, particularly when compared to the 2016 figures of 101million barrels and 144 million barrels lost to theft and deferred production respectively,” NEITI said.

    According to the report, out of the 690,465 million barrels of crude oil produced in 2017, a total of 688, 291million barrels were lifted.

    Though marginal, this represented an increase from the 668,147 million barrels lifted in 2016.

    The report also showed that the Nigerian National Petroleum Corporation lifted a total of 241 million barrels of crude oil on behalf of the federation.

    A breakdown of the lifting showed that federation exports accounted for 135 million barrels, while the domestic crude lifting accounted for 106 million barrels.

    The report disclosed that the federation exports volume went down by 36 per cent from 211 million barrels in 2016 to 135 million barrels in 2017.

    While lifting by the companies amounted to 447 million barrels, joint venture operations, production sharing contracts and sole risk operators accounted for 130 million barrels, 223 million barrels and 79 million barrels respectively.

    “Marginal field and service contract operators lifted 15 million barrels and one million barrels during the year under review,” the 2017 oil and gas report stated.

    On crude allocation for domestic use, the report indicated that in 2017, the NNPC allocated 105.925 million barrels for domestic use.

    It stated that while 25 per cent of this quantity was supplied to the refineries, 69 per cent was on the other hand utilised for the Direct Sale Direct Purchase arrangement.

    Cases of pipeline breaks on oil installations across the country witnessed a significant reduction between 2013 and 2017, dropping from 3,571 to 924.

    The report said the 2017 fiscal year showed that pipeline breaks reduced by 2,647 within the four-year period.

    Findings showed that after the country witnessed 3,571 pipeline breaks in 2013, the cases moved up to 3,732 breaks in 2014.

    It increased again in 2015 to 2,832 breaks and in 2016 Nigeria recorded 2,589 pipeline breaks across its oil installations.

    This dropped to 924 breaks in 2017, a development which industry operators described as significant.

    “This decline suggests a positive return on the actions taken to mitigate vandalism,” NEITI stated in its report.

  • Nigeria generated $17.05b from oil, gas sector in 2016 – NEITI

    Nigeria generated $17.05 billion from the oil and gas sector in 2016 representing a 31 per cent decline on the $24.79 billion generated in 2015,according to the latest report of the Nigeria Extractive Industries Transparency Initiative (NEITI).

    The sector fetched $68.44 billion for the country in 2011.

    The report says the 2016 earnings are Nigeria’s lowest in 10 years and the fifth lowest in the 18 years covered by NEITI’s audit reports so far (1999 to 2016). It attributed the decline in earnings to the double whammy of low oil prices in the global market and reduced oil production in Nigeria, which in turn was caused by disruption and vandalism of oil assets and spike in crude theft, among others.

    NEITI Director of Communications, Dr. Orji Ogbonnaya Orji, put Nigeria’s annual average price of crude oil per barrel at $43.73 in 2016 as against $52.5 in 2015.

    Total oil production in 2016 was 659 million barrels as against 776 million barrels produced in 2015, a fall of 15%. Losses due to crude oil theft and sabotage rose from 27 million barrels in 2015 to 101 million barrels in 2016, an increase of 274%.

    This was aside losses due to deferment, which in 2016 was put at 144 million barrels which also went up by 65% when compared to the 87.5 million barrels in 2015.

    He said:”The bombing of the under-water 48-inch Forcados Oil Loading/Export Pipeline was one of many major occurrences that befell the industry in the year under review.

    “This incident occurred in February 2016 and the line remained in-operational for seven months. Shell Petroleum Development Company (SPDC) declared force majeure on lifting from Forcados on 21st February 2016. Companies injecting into the Forcados Terminal such as Seplat, Panocean, Midwestern, Energia, Platform, Pillar, Waltersmith and EXCEL shut down production for over 147 days.”

    In addition, SPDC declared force majeure on the Bonny Terminal owning to a leak in Nembe Creek Pipeline between May and July 2016 while NAOC declared force majeure on the Brass Terminal between July and August 2016.

    Similarly, Mobil Producing Nigeria Unlimited declared force majeure twice between May/June and July/October 2016. This was due to a drilling process disruption and damage to the QIT loading system.

    The NEITI report stated that: “MPN’s total production within the four-month period was 4,616,825bbls, which is less than half of what was produced in each month previously as reflected in DPR reconciled sign-off records.”

    After surviving the slump in the global oil market in 2008 and 2009, Nigeria’s oil sector rebounded in 2010 with a 49% increase in total financial flows to $44.94 billion, followed by the peak of $68.44 billion in 2011.

    However, flows from the sector have been trending downward since that peak year with $62.94 billion generated in 2012, $58.08 billion in 2013, $54.56 billion in 2014, and $24.79 billion in 2015. Similarly, oil production has been on steady decline with 866 million barrels produced in 2012, 800 million barrels in 2013, 798 million barrels in 2014, 776 million barrels in 2015 and 659 million barrels in 2016.

    NEITI’s audit reports independently reconcile payments by companies against receipts by government agencies, and cover key financial flows such as earnings from sale of federation’s crude oil and gas, sector-specific taxes, fees and levies such as royalty, Petroleum Profit Tax (PPT), signature bonus, gas flared penalty, and other flows such as NDDC contribution, NCDMB levy, NESS fees, education tax and others. Breakdown of the payment shows that the major earnings for 2016 came from export and domestic sale of Federation crude oil and gas with $7.97 billion, PPT with $4.21 billion, and royalty oil with $1.57 billion.

    A major highlight of 2016 is that for the first time in Nigeria’s history, crude oil produced from Production Sharing Contracts (PSCs) overtook output from the Joint Ventures (JVs).

    In 2016, PSCs accounted for 324 million barrels, while the JVs accounted for 289.1 million barrels, (as against the 320 million barrels for PSCs and 375.5 million barrels for JVs in 2015).

     

  • NNPC, NPDC, others yet to remit $22.06bn, N481.75bn to FAAC – NEITI

    NNPC, NPDC, others yet to remit $22.06bn, N481.75bn to FAAC – NEITI

    The Nigeria Extractive Industries Transparency Initiative (NEITI) says that the 22.06 billion dollars and N481.75 billion yet to be remitted by NNPC and others to the Federation Account are legacy issues from its audit reports for 1999 to 2015.

    NEITI made the clarification in a statement signed by its Director of Communications and Advocacy, Dr Orji Ogbonnaya Orji, in Abuja, on Tuesday.

    He said that the others stakeholders involved include the Nigerian Petroleum Development Company (NPDC) and oil companies in the oil and Gas sector.

    He said that the bulk of the outstanding amounts was from NLNG dividends from 2000 to 2015 and outstanding payments for the value of 12 Oil Mining Licenses (OMLs) divested to NPDC between 2011 and 2013.

    “To say the non remittance happened under this administration or that the money went missing from the Federation Account is therefore totally incorrect and deliberately misleading.

    “This clarification has become necessary based on the distortion and politicisation of the media reports of a conference hosted by NEITI in Abuja on Monday,’’ he said

    Orji said that the focus of the conference was on how to ensure better implementation of NEITI’s audit recommendations, address the lingering issues in the extractive sector, and improve optimisation of Nigeria’s extractive endowments for the benefit of all Nigerians.

    “The conference was not a fault-finding or political event.

    “It was a solution-oriented gathering with good representation and useful contributions from government agencies (including NNPC, DPR, CBN, PPPRA etc), the private sector, civil society, academia, and the media,’’ he added.

    He noted that information shared for discussion was not only historical, but also not new.

    He further stated that there was no data shared and discussed at the conference that had not been made public over time, most notably in the NEITI Policy Brief on unremitted funds released in April 2017 and in the NEITI 2015 industry audit reports released in December 2017.

    “Those who follow discussions on these issues closely would also be aware that various efforts have been made by different government institutions, including the Federation Allocation Accounts Committee (FAAC) and the National Economic Council (NEC) to ensure that NNPC and its subsidiaries address these legacy issues.

    “It is noteworthy that at the conference yesterday, the NNPC team confirmed that many of the issues under reference have either been resolved or at advanced stages of resolution.

    “ While NEITI awaits the outcome of its ongoing audits for 2016 and 2017 to provide update on these and other issues, it is wrong to deliberately distort data from NEITI’s audits and the issues arising from them for sensational or political purposes,’’ Orji said.

    He appeal to the media and the civil society as key partners in the NEITI process to always cross-check to ensure that facts align with the issues before publication.

  • Nigeria’s oil revenues dip by 55 percent to $24.8b in 2015 – NEITI Report

    Nigeria’s oil revenues dip by 55 percent to $24.8b in 2015 – NEITI Report

    …tasks government on oil metering and recovery of $3.7billion outstanding revenues

    …Urges NNPC to give full account and status of $16.8 billion NLNG dividends

    The Nigeria Extractive Industries Transparency Initiative (NEITI) 2015 Oil & Gas Industry Audit Report released on Thursday revealed that Nigeria’s oil and gas revenues plunged from $54.5 billion in 2014 to $24.8 billion in 2015, while the country’s oil production fell from 798 million barrels in 2014 to 776 million barrels in 2015.

    According to the NEITI 2015 Oil and Gas Industry Audit Report, the total outstanding revenue from the sector as at 2015 was $3.7 billion and N80 billion, while losses incurred stood at $2.2 billion and N60 billion, and unreconciled revenues amounted to N317 billion.

    “Beyond providing a snapshot of what transpired in 2015, this report reveals money to be recovered, leakages to be blocked, and urgent reforms to be undertaken,” said Waziri Adio, the Executive Secretary of NEITI, at the release of the report today.

    “The most critical take-away is the need to expedite, expand and sustain reforms in this still critical sector of national life.” The report shows that Nigeria suffered a 54.6% decline in oil revenues but only a slight 2.7% fall in oil production. “This was due to drastic reduction in the unit price of crude oil in the global market,” states the report.

    It will be recalled that the yearly average price of crude oil per barrel tumbled from $101.91 in 2014 to $52.16 in 2015. Oil and gas revenues have been declining since 2011 when total revenues peaked at $68.4b. A five-year analysis in the report reveals that revenues declined by 8%, 7.7% and 6% in 2012, 2013 and 2014 respectively.

    However, the decline leapt to double digits in 2015 when total revenue dwindled by more than half. Total oil production also dropped but not by much: from 798 million barrels in 2014 to 776 million barrels in 2015. The report attributed the decline to oil theft and militancy. However, total gas production went up by 20.23% from 2, 593,090 mmscf in 2014 to 3, 250, 667 mmscf in 2015.

    The jump by a fifth was on account of the combined effect of increase in gas utilisation and decline in gas flaring. According to the report, the total oil lifted in 2015 was 780 million barrels, about four million barrels higher than the amount produced with the balance drawn from previous years. Of the 780 million barrels, the companies lifted 467 million barrels while NNPC lifted 313 million barrels.

    NNPC’s liftings were split almost evenly between Federation Export and Domestic Crude Allocation, which accounted for 159.4 million barrels and 153.9 million barrels respectively. However, only 8.7 million barrels or 5.6% of crude oil allocated for domestic consumption went to the refineries in 2015 on account of the state of the refineries. Other major highlights of the report include the following:

    • NLNG Dividends In 2015, the Nigeria Liquefied Natural Gas Limited (NLNG) paid $1.07 billion as dividend, interest and loan repayment to NNPC, broken down as follows: $1.04 billion as dividends, $3.1 million as interests, and $29.1 million as loan repayment. This brings to a total of $16.8 billion NLNG’s payments to NNPC for the period 2000 to 2015.

    The payments are for the loan grant to NLNG and for the 49% stake that the government holds in the company. While NNPC has always confirmed receipt of the payments, it has never shown evidence of remittance to either the Federal Government or to the Federation Account.

    NNPC maintains that it has authorization from the presidency to hold the dividends in trust and utilize as directed by the government. NEITI recommends that NNPC should provide documentary evidence of the authorization to hold the money in trust and to give account of the expenditure from and the status of the $16.8 billion collected in 16 years.

    • Crude Theft and Product Losses

    The volume of crude oil declared lost to theft by 13 operators in 2015 was 27.1 million barrels. Though this amounted to only 3.5% of total oil production, the loss was valued at $1.4 billion. PPMC also declared loss of crude worth $25 million, bringing the total declared losses to $1.45 billion. This brings the established loss to theft from 2011 to 2015 to a total of 113.1 million barrels valued at $11billion. Also, PPMC declared losing products worth N56.4 billion, broken down as follows: N52 billion for losses on petrol, N3.8 billion for losses on diesel, and N123 million for losses on kerosene. Deferred production on account of sabotage or repairs came to 57 million barrels. NEITI reiterates its call for effective and adequate metering infrastructure and enhanced security of our oil and gas assets.

    • Deductions from Domestic Crude Allocation (DCA)

    The 153.92 million barrels of crude allocated for domestic consumption (at 445, 000 barrels per day) was utilised as follows: 56.11 million barrels or 37% to PPMC for export; 89 million barrels or 57% for Offshore Processing Arrangement (OPA) and 8.74 million barrels or 5.6% for local refineries. The total value of the domestic allocation came to $7.77 billion or N1.5 trillion. When combined with the closing balance for the previous year and with allowance made for liability acknowledged and upfront deductions by NNPC, there was an un-reconciled sum of N317 billion from the value of crude allocated for domestic consumption.

    NNPC acknowledges having a liability of N418 billion as at 31st December 2015. Also, NNPC deducted the following upfront from domestic crude account: N60.9 billion for losses; N316.7 billion for subsidy; and N112 billion for repairs and maintenance.

    A breakdown of the repairs and maintenance expenses shows that N24.2 billion was spent on crude movements; N22.1 billion on fund releases for salaries; N15.6 billion on demurrage; N13.2 billion on share of upfront; N11.37 billion on product distribution; N10.5 billion on through/marine; N4.12 billion on facility repairs; N3.27 billion on operations; N1.9 billion on security; and N1.3 billion on projects, among others. NEITI recommends that upfront deductions should be discontinued and that NNPC should settle its liabilities and reconcile the unreconciled amount.

    NEITI also recommends that detailed records of losses and repairs be kept to ensure transparency and accountability.

    • Non-Cash Call Items

    The total cash calls paid to joint venture operators in 2015 was $4.37 billion. Out of this, $597.8m was paid on what the report considers non-cash call items. This included $307.83 million paid to the National Intelligence Agency (NIA) and Navy for security; $238 million collected by NAPIMS as administrative charges; $7.2 million for travelling and accommodation; and $4.8 million for consultancy, among others. NEITI recommends that non-cash call expenses should be paid from NNPC overhead budget, and payment to NIA and others from cash call account should be discontinued.

    • OPA and Other Losses

    The report shows that in 2015 the country recorded a net loss of $723 million from getting refined products through Offshore Processing Arrangement (OPA). This means that the value of refined products that the country received through OPA was less than the value of the crude given by $723 million, even after allowances had been made for costs and margins. The President Muhammadu Buhari administration cancelled the OPA in November 2015 for being uneconomical. However, there was an outstanding liability of $498 million by companies contracted under OPA from under-delivery of imported products.

    The report shows that $90m was lost through a practice where NNPC used a revised/lower pricing option at the point of payment instead of the higher price at the point of purchase. The report states that NNPC has stopped the practice of double valuation with the coming of the present administration. NEITI recommends close monitoring of the Direct Sale Direct Purchase (DSDP) arrangement that replaced the OPA to ensure the country is not being shortchanged. It also calls for government to recover the $498m OPA liabilities from the affected companies.

    • NPDC’s Liabilities From the report, NPDC (the upstream arm of NNPC) reduced its legacy liabilities from $1.45 billion and N80 billion in 2014 to $757 million and N68 billion in 2015. However, NPDC incurred liabilities of $822 million and N9.6 billion in 2015, bringing its total liabilities at the end of 2015 to $1.5 billion and N78 billion.

    The report also showed that NPDC promised that by 31st December 2017 it will pay the balance of $1.7 billion that it owes the Federation from the eight OMLs divested to it from the Shell JV between 2010 and 2011. It will be recalled that the OMLs were valued at $1.8 billion, which is believed to be discounted and that NPDC paid only $100m.

    The report also showed that the valuation for the four OMLs divested to NPDC from the NAOC JV in 2012 was revised down from $2.25 billion to $1.55 billion by DPR. NPDC claims that the Federation owes it $95 million, having lifted oil from the divested assets and received payments from gas proceeds between 2012 and 2015.

    NEITI recommends that NPDC should pay its outstanding liabilities and that the basis of the revaluation and mode of payment of the divested assets be examined to ensure that the Federation is not shortchanged.

    The NEITI 2015 Oil and Gas Audit Report is the eighth to be produced since the extractive sector transparency regulator came into being in 2004.

    The report was released today, after approval by the National Stakeholders Working Group (NSWG), which is the governing board of NEITI headed by Dr. Kayode Fayemi, the Minister for Mines and Steel Development. The audit was conducted by Haruna Yahaya & Co., a Nigerian accounting and audit firm selected through an international competitive process. The 2016 audits will commence early next year while the procurement process for the 2017 audits has commenced.

    “Our goal is to clear the backlog as quickly as possible,” Mr. Adio, the NEITI ES, said.

  • How federal, states, councils share N2.8tr in six months – NEITI

    The Nigeria Extractive Industries Transparency Initiative (NEITI) on Sunday said the three tiers of government; federal, states and local governments shared N2.788 trillion between January and June this year.

    According to a statement by NEITI Director of Communications, Dr. Orji Ogbonnaya Orji, the allocation shows a 38 per cent increase on the N2.019 trillion shared in the first half of 2016.

    NEITI said the figure is contained in its Quarterly Review, which focuses on disbursement from the Federation Accounts and Allocation Committee (FAAC).

    The review was based on data obtained by the agency at the meetings of FAAC and data from National Bureau of Statistics, Office of the Accountant General of the Federation, Federal Ministry of Finance and the Debt Management Office.

    Out of $2.788 trillion disbursed in the first half of 2017, the Federal Government received N1.09 trillion, 36 state governments received N923 billion while N549.8 billion went to 774 local governments.

    A further breakdown shows that total releases to the three tiers of government was N430.16 billion in January, N514 billion in February, N496.40 billion (March), N418.82 billion (April), N418.82 billion (May) and N462.36 billion (June).

    However, despite the 38 per cent increase in disbursements in the first half of 2017 when compared with 2016, the three tiers of government suffered significant revenue decline in terms of projected FAAC disbursement.

    “Coupled with the low price of oil is the country’s difficulty in meeting the targeted/budgeted production rate of 2.2 million barrels per day. Production has consistently fallen below two million barrels per day since March 2016. Thus the double “whammy” of low oil prices and lower production that hit the country since 2014 has remained” the NEITI Quarterly Review observed.

    For instance, while the expected FAAC disbursement for the three tiers of government was N4.7 trillion, the actual FAAC disbursement to them was N2.788 trillion, representing a shortfall of over 40.67 per cent.

    According to the publication, “the volatility nature of disbursements to all tiers of government in the first half of 2017 would suggest difficulty in implementing budgets at Federal, state and local government levels. The volatility in revenue inflows will adversely affect planning and expenditure of government and thus likely hamper efforts at stimulating growth and development”.

    The quarterly review added that a total of N513 billion was spent on debt servicing by the three tiers in the first quarter of 2017.

    This was against the N1.276 trillion disbursements in the first quarter. This means that debt servicing took up 40.27 per cent of FAAC disbursement for the first quarter of this year.

    “The figure reveals that debt servicing as proportion of total FAAC allocations is generally higher in the first quarter of the year, after which it falls to lower levels. Based on this, the figure of 40.27 per cent observed in the first quarter of 2017 might be an upper threshold and it would thus be expected that this figure will be lower for the remaining quarters of the year”, the report said. However, the Debt Management Office (DMO) is yet to provide data on the figure for the second quarter of 2017.

    In this direction, the NEITI publication expressed concern that the nation’s debt in relation to revenues appears to have reached critical levels. It further noted that domestic debt servicing constituted 90 per cent of total debt servicing.

    The report remarked that “domestic debt servicing consistently outstrips external debt servicing. In the first quarter of 2015, domestic debt servicing made up over 93 per cent of total debt servicing. This figure did not change much by the first quarter of 2017 as domestic debt servicing was over 92 per centof total debt servicing”.

    On the Paris Club debt refund to the 36 states and Federal Capital Territory (FCT), the NEITI Quarterly Review confirmed that N760.18 billion was released by the Federal Government to the 36 states and the FCT.

    The money, which was paid in two tranches represents refunds of over deductions from FAAC allocations to states and local governments used for quick payment of debt relief granted to Nigeria by the Paris Club between 1995 and 2002.

    The NEITI publication disclosed that Rivers received the highest amount of N44.93 billion followed by Delta with N37.61billion and Akwa Ibom N35.98 billion. Bayelsa got N34.9 billion and Kano State received N31.74 billion. The Federal Capital Territory, Abuja received the lowest amount of N2.05 billion.