A Review of the Nigerian Energy Industry

Nigeria earns N1.8tr from petroleum tax, royalties

*Offshore oil rig 

Ike Amos

07 March 2018, Sweetcrude, Abuja – Nigeria earned N1.801 trillion from Petroleum Profit Tax, PPT, and royalties in 2017, latest data obtained from the Central Bank of Nigeria, CBN, has revealed.

According to the CBN’s Economic Report for the Fourth Quarter of 2017, the amount earned from PPT and royalties appreciated by 51.09 per cent or N609 billion in 2017, compared to N1.192 trillion in 2016.

Earnings from PPT/royalties accounted for 43.82 per cent of the country’s gross oil earnings of N4.11 trillion in 2017.

On a quarter by quarter analysis, the report stated that in the first and second quarters of 2017, PPT/royalties stood at N325.38 billion and N320.49 billion respectively; while it rose to N489.41 billion and N666.1 billion in the third and fourth quarters respectively.

This, according to the report, was in comparison to PPT/royalties of N314.04 billion, N212.78 billion, N392.38 billion and N273.13 billion recorded in the first, second, third and fourth quarter of 2016 respectively.

At N4.11 trillion, the report noted that Nigeria’s gross oil revenue appreciated by 52.5 per cent or N1.42 trillion, from N2.7 trillion recorded in 2016.

In particular, the report stated that in the first and second quarters of 2017, gross oil revenue stood at N817.48 billion and N795.55 billion respectively, compared to N666.13 billion and N537.19 billion recorded in the same periods in 2016.

Again, in the third and fourth quarters of 2017, the country recorded gross oil revenue of N1.271 trillion and N1.226 trillion respectively, as against N817.48 billion and N673.10 billion in the third and fourth quarters of 2016 respectively.

The report added that “Gross oil receipt at N1.226 trillion or 60.1 per cent of the total revenue, was lower than both the proportionate quarterly budget estimate and the receipts in the preceding quarter by 9.1 per cent and 3.5 per cent, respectively”.

“The decline in oil revenue relative to the proportionate quarterly budget estimate was attributed to the fall in receipts from crude oil/gas exports. This was due to the drop in crude oil production, arising from leakages and shut-ins/shut-downs,” the report explained.

The CBN put Nigeria’s crude oil production, including condensates and natural gas liquids in the fourth quarter of 2017, at an average of 1.80 million barrels per day, mbd, or 165.60 million barrels in the three-month period, representing a decline of 0.03 mbd or 1.8 per cent, compared with 1.83 mbd or 168.36 million barrels recorded in the third quarter.

The CBN blamed the decline in Nigeria’s crude oil output on shut-ins/shut-down in some of the production facilities across the oil-producing areas of the country.

The report also added that Nigeria’s crude oil export for the fourth quarter of 2017 dipped by 2.4 per cent, from 126.96 million barrels or an average of 1.38 million barrels per day in the third quarter of 2017 to 124.20 million barrels or 1.35 million barrels per day.

It said: “The development was due, mainly, to continued commitment by OPEC and Non-OPEC countries to avoid flooding the global market, despite the exemption of Nigeria from the production cap agreement.”

The report also noted that allocation of crude oil for domestic consumption was maintained at 0.45 million barrels per day or 41.40 million barrels in the entire fourth quarter.

The CBN also noted that, “The average spot price of Nigeria’s reference crude oil, the Bonny Light (37° API) rose from $52.92 per barrel in the third quarter of 2017 to $62.48 per barrel in the review quarter. This represented an increase of 18.1 per cent.

“The increase was attributed to the production-cut agreement, demand growth from China and increased refining activity in the United States. The UK Brent, at $61.69 per barrel, the WTI at $55.47, and the Forcados at $62.60 per barrel exhibited similar trends as the Bonny Light.”

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