Lagos — The Nigeria Extractive Industries Transparency Initiative, NEITI, has accused two oil companies, ND Western Limited and Shoreline Natural Resources of reporting crude oil losses higher than their production output for the year 2019.
NEITI, in its 2019 oil and gas audit report released recently, said the company over-reported the losses due mainly to faulty metering facility, in addition to theft and sabotage.
According to NEITI, companies reporting crude loses higher than fiscalised production implies that the Federation is losing benefits from the production arrangement.
In the case of ND Western, the extractive industry transparency watchdog stated that the company’s fiscalised crude oil production for 2019 was 1.459 million barrels, while the company reported crude oil losses of 2.306 million barrels; representing 158.10 per cent of its fiscalised production.
On the other hand, Shoreline Natural Resources, the NEITI report stated, reported crude oil loss of 7.474 million barrels in 2019, which is 153.12 per cent of its fiscalised production of 4.881 million barrels.
The DPR, according to NEITI, explained that measurement error refers to losses due to application of Estimated Meter Factor, nonapplication of Volume Correction Factor (VCF) determination and/or improper determination of Base Sediment and Water (BS&W), noting that monitoring of the situation was ongoing.
However, NEITI said: “DPR should ensure that terminal operators take necessary steps to remedy the situation so that losses from metering can be eliminated or minimised.”
The NEITI report noted that a total of 250.7 million barrels of fiscalised crude oil production was recorded in 2019, out of which 42.25 million barrels was lost to metering errors, theft and sabotage, representing 16.85 per cent of total production output.
Of the 42.25 million barrels of crude oil lost, 11.74 million barrels was due to metering error, representing 4.68 per cent of total fiscalised crude oil output; while 30.5 million barrels of crude oil, representing 12.17 per cent of total fiscalised crude oil output, was lost due to theft and sabotage.
In addition, NEITI disclosed that the Nigerian National Petroleum Corporation (NNPC) spent N126.66 billion on pipeline repairs and management cost in 2019.
This amount, the report noted, was in addition to the N31.84 billion the country recorded as crude oil and petroleum product losses in the year under review.
Specifically, NEITI said: “Of the N2.722 trillion remittable by NNPC in 2019, N518.074 billion (19%) was deducted for Premium Motor Spirit (PMS) under-recovery, N31.844 billion (1%) as crude and product losses and N126.664 billion (5%) as pipeline repairs and management cost. Furthermore, N546.385 million (20%) represented receivables while N1.499 trillion (55%) was due to be paid in 2019.”