NEITI: Nigeria generated $34.22 billion from oil industry in 2019

The Nigeria Extractive Industries Transparency Initiative, NEITI, has said that it will be working with the Corporate Affairs Commission, CAC, to identify, document and disclose the real owners of Nigeria’s oil, gas and mining assets under the country’s implementation of Beneficial Ownership policy of the global extractive industries transparency initiative.

The Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday disclosed that the country earned a total sum of $34.22 billion from the oil and gas sector in 2019, an increase of 4.88 per cent over the $32.63 billion revenue netted from the sector in 2018.

A breakdown of the earnings, contained in the just-released 2019 oil and gas industry audit report, showed that payments by companies accounted for $18.90 billion, while flows from federation sales of crude oil and gas accounted for $15.32 billion.

From 2010-2019, the aggregate financial flows from the oil and gas sector to government, according to NEITI, amounted to $418.544 billion, with the highest revenue flow of $68.442 recorded in 2011, while the lowest revenue flow of $17.055 was recorded in 2016.

According to NEITI, the total crude oil production in 2019 was 735.244mmbbls, representing an increase of 4.87 per cent over the 701.101mmbbls recorded in 2018.

It stated that Production Sharing Contracts (PSCs) contributed the highest volumes of 312.042mmbbls followed by Joint Venture (JV) and Sole Risk (SR) which recorded 310,284mmbbls and 89.824mmbbls respectively.

The Dr Ogbonnaya Orji-led organisation, listed others as Marginal Fields (MFs) and Service Contracts (SCs) which accounted for 21,762mmbbls and 1,330mmbbls respectively.

The report also showed that total crude oil lifted in 2019 was 735.661mmbbls, indicating a 4.93 per cent increase to the 701.090 mmbbls recorded in 2018, with companies lifting 469.010mmbbls, while 266.650mmbbls was lifted by the Nigeria National Petroleum Corporation (NNPC) on behalf of the federation.

“Analysis of crude oil lifted by NNPC showed that 159.411mmbbls was for export, while 107.239mmbbls was for domestic refining and 97 per cent of the volumes for domestic refining (104.475mmbbls) was utilised for the Direct Sale Direct Purchase (DSDP) programme while the remaining 3 per cent (2.764mmbbls) was delivered to the refineries,” it stated.

NEITI reported that the value of the 2019 domestic crude oil earnings was N2.722 trillion, while of the figure, N518.074 billion was deducted for petrol under-recovery by the NNPC.

“This figure was N213.074 billon above the approved sum of N305 billion for under recovery in 2019. Similarly, the sum of N126.664 billion was incurred by the corporation as costs for pipeline repairs and maintenances which showed a difference of N96.378billion from the approved sum of N30.287billion for that purpose,” NEITI said.

In addition, the report pointed out that N31.844 billion was deducted for crude and product losses due to theft and sabotage in 2019, with petrol imported in 2019 being 20.603 billion litres.

Furthermore, 330,362,020 litres of the petrol valued at N44.03 billion ($143.694million using N306.42/USD) was lost to vandalism and leaks of the product pipelines across the country.

On gas production, the NEITI report showed that 3,047,507.32mmscf was produced in 2019, representing an increase of 4.8 per cent when compared to the 2,909,143.56mmscf reported in 2018, while $247.794 million was realised from gas sales for the year under review.

“The total cash call for 2019 was $5.512 billion (US$2.898 billion and N797.324 billion). There was an outstanding cash-call legacy liability of $1.900billion as at 31st December 2019,” NEITI added.

According to the report, the sum of $896.891 million was recorded as social expenditure in 2019, made up of non-mandatory contributions of $81.297 million (9.06 per cent) and mandatory contributions of $815.594 million (90.94 per cent).

“The mandatory contributions consisted of the 3 per cent levy to the Niger Delta Development Commission amounting to $721.275 million and 1 per cent levy to the Nigeria Content Development Monitoring Board (NCDMB) totalling $94.319million.

“The non-mandatory contributions are various payments voluntarily made by the companies to their host communities for the provision of social amenities, scholarships etc,” the NEITI report stated.

According to NEITI, the total number of employees in the oil and gas sector in 2019 was 18,856, adding that while 82 per cent of this number was male, while 18 per cent was female.

“The top management accounted for 10 per cent, middle management, 47 per cent and lower-level staffs, 43 per cent,” it pointed out.

On total expenditure on environmental impact assessments in 2019, the NEITI report stressed that $480,525 million and N154.48 million were expended, while $2.4 million and N33.1 million were spent on fees and other costs associated with environmental monitoring and evaluation.

On recommendations, NEITI urged the Office of the Accountant General of the Federation (OAGF) to advice the NNPC to prepare its budget on a gross basis by stating its gross revenue and costs.

The report noted that the practice if adopted, will improve transparency and accountability in NNPC’s transactions on behalf of the federation and further requested that NNPC should carry-out detailed reconciliation on transportation revenues regularly as a mechanism for checks and balances.

It also observed that entities are reporting crude losses higher than the ‘fiscalised’ production and recommended that the DPR should take steps to reduce losses by the terminal operators.

It also highlighted the outstanding liabilities by companies as of 2019 year end and advised the respective government agencies to recover the debts.

The report reconciled payments from 98 entities, including 88 oil and gas companies, nine government agencies and the Nigerian Liquefied Natural Gas (NLNG).

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