Nigeria: Govt records 8% decline in hydrocarbon revenue in 2013

*Bonny Oil Terminal, Nigeria's premier oil & gas export terminal.

*Bonny Oil Terminal, Nigeria’s premier oil & gas export terminal.

Kunle Kalejaye

24 May 2016, Sweetcrude, Lagos — There was a sharp decline in the total financial flow to the Federal Government from $62.99 billion in 2012 to $58.192 billion in 2012, which indicates an eight percent revenue drop.

This is contained in Nigeria Extractive Industries Transparency Initiative, NEITI 2013 audit report released today in Abuja.

The decrease in 2013 according to the audit report was largely due to a drop in the sales revenue from crude oil and gas attributable to a reduction in production and lifting volumes.

The audit report added that the reduction in production and lifting volumes is due to divestment of Federation Equity in some OMLs, notably from Nigeria Agip Oil Company, NAOC and Shell Production Development Company, SPDC Joint Ventures from which Nigeria National Petroleum Corporation, NNPC lifted crude oil on behalf of Nigeria Production Development Company, NPDC instead of the Federation.

Other reason reduction in production and lifting volumes includes deferred production and crude oil losses due to the destruction of production facilities and pipeline breakages; crude oil theft.

On a positive note, the audit report stated that there was an increase of 4,520 percent in concession rentals in 2013 ($133,750,000) compared to 2012 ($2,895,000).

“This was largely due to $131, 075, 000 outstanding from previous years made by Total Exploration and Production, TEPNG. The payment from TEPNG alone accounted for 98 percent of the total payment ($133, 750, 000) of concession rentals made in 2013,” the audit report stated.

On gas flare, the audit report states that there was a reduction of 25 percent in gas flared penalty in 2013 ($18,475,000) when compared to 2012 ($24,580,000), noting that it was as a result of increase in gas utilisation and a gradual decline in gas flaring trend to meet the government policy of zero gas flaring.

Meanwhile in NEITI explained that 41 oil and gas companies and 16 government agencies were audited for the 2013 Oil and Gas Audit cycle noting that they were the producing companies that made material payments of $5 million and above in 2013.
The report added that the total crude oil production in 2013 from NNPC records was 800.488m barrels.

“This volume was inclusive of production from Joint Ventures, Production Sharing Contracts, Service Contract (SC), Sole Risk (SR)/Independent Operators and Marginal Fields Operators.

“However, the total volume of crude lifted by the different contract arrangements from NNPC records was 800.338m barrels,” the report stated.
It added that revenue flow to the Federation, Other Tiers of Government and Sub-National Entities from all sources (crude oil sales, taxes, royalties and other incomes) amounted to $58.07bn.

“The total outstanding revenue from NNPC and its sub-units from the 2013 Oil And Gas Industry Audit stood at $3.8 billion and N358.3bn. The total losses to the Federation due to Offshore Processing Arrangement (OPA), Crude Swap, Crude Theft e.t.c. came to about $5.96bn and N20.4bn.

“Total under-assessment and underpayment by companies due to contested pricing methodology amounted to $599.8m in 2013.

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