FOLLOWING a report by The ICIR, the executive secretary of the Extractive Industries Transparency Initiative (NEITI), Orji Ogbonnaya Orji, has highlighted ways to prevent future discrepancies between its reports and that of the state-owned oil company.
Orji proffered the solutions when he responded to The ICIR publication of September 29.
In its recent report on crude oil sales, NEITI presented discrepancies from the figures declared by the Nigerian National Petroleum Company Limited (NNPCL) in its 2023 audited account.
The NNPCL posted a crude oil sales increase from N3.53 trillion in 2022 to N14.07 trillion in 2023, using an overall foreign exchange rate of N846.92 and N507.43 per dollar to translate its accounts to naira in 2023 and 2022, respectively.
However, in its 2022/2023 Independent Oil and Gas Industry Report released on Thursday, September 26, NEITI reported a decline in crude oil sales by the NNPCL.
According to NEITI, crude oil sales by the NNPCL declined in 2023 relative to 2022.
It said NNPCL sold $16.467 billion in crude oil in 2023, dropping from $18.106 billion in 2022.
Admitting the discrepancies sighted in The ICIR report, the NEITI’s boss said the organisation observed a huge gap in data harmony.
He said NEITI recommends that NNPC should invest more in data management processes and establish technology-drive controls to prevent future discrepancies.
NEITI also recommends that NNPC should ensure regular monitoring and data reconciliation to mitigate the recurrence of discrepancies, especially among NNPC Limited business units, citing page 118 on its report.
“We will be commencing engagements very soon with the NNPCL and all covered entities where remedial issues have been identified by the 2022-23 Oil and Gas Report under the NEITI Industry Reports Remediation Plan,” Orji told The ICIR.
He explained that the NEITI Industry Audit covers entities and multi-stakeholders driven in compliance with the standards of the global Extractive Industries Transparency Initiative (EITI), to which Nigeria is a signatory.
Under EITI standards and the NEITI Act which guides the conduct of the industry audit, Orji said NEITI reviewed the NNPCL total lifting and sales profiles independently to validate the numbers with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) crude lifting reports.
From its independent review, a total of 196.344 million barrels of crude were lifted and sold by NNPCL in 2023 as against 176.012 million barrels sold in 2022, which represents an increase of 20.333 million barrels.
“The lifting volume translated to a total of US$16.467 billion realised in 2023 and US$18.106 billion in 2022, which was a decrease of US$1.639 billion or (9%).
“Furthermore, out of the NNPCL total sales value of US$16.467 billion in 2023, only US$11.348 billion belonged to NNPCL while others were crude for Federation, NUPRC and FIRS. And out of the US$18.106 billion in 2022, only US$1.402 billion belonged to NNPCL,” Orji explained.
He said, however, that a close examination of the process and relevant controls to prevent discrepancies.
“NEITI clearly observed a huge gap in data harmony. NEITI 2022 and 2023 industry reports under reference tracked these and our recommendations on page 118 of the main report speak for themselves.
“For instance, aggregated total crude sales revenue determined by the 2022-2023 NEITI Report was N10.284 trillion as against crude oil sales revenue of N12.026 trillion stated in the 2023 audited financial statements of NNPC Limited indicating a variance of N1.742 trillion or 17%),” the NEITI boss added.
The ICIR can report that apart from the NNPCL, other companies lifted 337,815 million barrels of crude in 2023 from 306,004 million barrels of crude in 2022.
The crude lifting was from Joint Ventures, Production Sharing Contracts, Sole Risk and Marginal Fields.
It brought the total crude oil lifting to 534.159 million barrels in 2023, compared to 482.074 million barrels in 2022.