NNPC Lifts $20.93bn Crude Oil In 21 Months-Report

NNPC Lifts $20.93bn Crude Oil In 21 Months-Report

The Nigerian National Petroleum Corporation (NNPC) lifted crude oil valued at $20.93 billion between January 2015 and September 2016, on behalf of government, according to a new report joint produced by the Nigerian Extractive Industry Transparency Initiative (NEITI) and BudgIT, a non-government organization engaged in transparency in government activities.
The report titled: “Review of NNPC’s monthly financial and operation reports” in the 21 months between January 2015 and September this year, noted that of this amount, oil lifted for domestic use got the lion’s share of $11.57 billion or 55.27 per cent.
However, only 9.74 per cent of the total 245.4 million barrels of crude oil lifted for domestic use was delivered to the nation’s refineries, raising questions as possible fraud as “the remaining were exported for a variety of uses. 64.8 million barrels were exported directly.
“This amounts to 26.4% of the total domestic crude.
“Furthermore, 97.6 million barrels were sold under the Offshore Processing Agreements (OPA), amounting to 39.77% of the total.”
Another 58.29 million barrels were sold under the Direct Sales-Direct Purchase (DSDP) scheme, making up 23.75 per cent of the total, which the report noted, “reflected the dire condition the nation’s refineries are in.
“This has been flagged severally by the annual NEITI oil and gas audits since 2006 as a remedial issue that must be addressed urgently,” the report added, recalling that “the disadvantages of the OPA were highlighted by the 2009-2011 NEITI audit reports,” resulting in the April 2016 discontinuation of the OPA.
The domestic crude liftings was followed by the $4.25 billion lifting for the Federal Inland Revenue Service (FIRS); while oil lifted for exports was worth $4.25 billion; and $616 million oil lifted for Department of Petroleum Resources (DPR).
While reiterating the need for the state oil corporation to develop an index by which it continuously measures progress recorded in enhancing its transparency and public accountability, the report dated December 2016, noted a general decline in values of crude oil lifted.
“The highest value of crude oil lifted was in May 2015 ($4 billion), out of which total government crude oil lifting was $1.43 billion, while total IOC (International Oil Company) and independents lifting was $2.41 billion.
“The lowest value of crude oil lifted was $1.96 billion recorded in
January 2016.
“International and Independent Oil Companies lifted over 50% of crude oil and lifted a total of oil worth $38.7 billion between January 2015 and September 2016,” the report added, stressing that they “lifted as much as 69.1% of the value of total crude oil liftings in November 2015.”
The report added that based on findings from the NEITI oil and gas reports, the IOCs lift the larger share of production owing to “their cost/share oil due to third party financing and Modified Carry Agreement arrangements.”
Between February 2015 and August 2016, an average of 24.24 million litres of petrol
(PMS) were sold per day, with the highest daily average of 35.09 million litres was recorded in May 2016, while the lowest sale of 15.23 million litres was in September 2015.
“It is also seen from the figure that daily average petrol sales in 2015 fluctuated between 15 and 25 million litres. Average petrol sales experienced a surge in 2016 and fluctuated between 25 and 35 million litres,” just as an average of 1.06 million litres and 3.12 million litres of diesel (AGO) and kerosene (DPK), respectively in the 21-month period.
In the period under review, the report noted that the NNPC Group made losses in its financial performance, as expenditure exceeded monthly revenue in all but January 2015 and May 2016.
The report noted that corporation’s losses were as much as N46 billion in September 2015, amidst the rather volatile group surplus/deficits.
In first quarter 2015, the report continued, average daily production was 2.16 million barrels per day, dropping to 2.02mbpd in Q2 2015, staying above 2mbpd in the four quarters of that year.
This has however fallen drastically in 2016, with average oil production at 2.05mbpd in the first quarter, before dropping to 1.6mbpd in third quarter with “implications for faithful implementation of the 2016 budget” which was predicated on 2.2mbpd benchmark.
“It is seen from the figure that production from Production Sharing Contracts (PSCs) has consistently outstripped production from Joint Ventures (JVs) in the period under review.”
The NEITI-BudgIT report noted that output from Production Sharing Contracts (PSCs) has consistently outstripped production from Joint Ventures (JVs) in the period, which the NNPC attributed to the fact that PSCs are mainly deep-water assets, while production from JVs are predominantly from onshore and shallow water locations.
This is why, it noted, output from PSCs have remained relatively stable, overtaking JVs as the largest contributors to crude oil production, accounting for between 25 and 28.7mb per month.
“On the other hand, production from JVs has fluctuated a great deal, between 14.4 million and 24.2 million barrels per month.
“In addition to militant activities, divestment of Federation equity in some OMLs, notably from NAOC and SPDC JVs from which NNPC lifted Crude Oil on behalf of
NPDC instead of Federation Account, has significantly reduced NNPC’s JV production.
“These onshore and shallow water locations have been severely damaged by militant activities and security breaches.
Also, while PSCs contributed between 40% and 53% of total crude oil production, JVs accounted for between 27% and 35%, while Alternative Financing’s (AF) ranged from 11% to 18%. The NPDC’s contribution was between 2% and 7%, while Marginal Fields contributed between 3% and 7%.