Nigeria National Petroleum Corporation (NNPC) failed to remit $16.8 billion from the Nigeria Liquefied Natural Gas (NLNG) to either the Federal Government or federation account, in 15 years, the 2015 Nigeria Extractive Industries Transparency Initiative (NEITI) Oil and Gas Industry Audit Report has revealed.
The report, released on Friday, shows that the unremitted money was NLNG’s payments to NNPC for the period 2000 to 2015, indicating that the payments are for the loan grant to NLNG and for the 49% stake that the government holds in the company.
The report disclosed that in 2015 alone, NLNG paid $1.07 billion as dividend, interest and loan repayment to NNPC, broken down as $1.04 billion as dividends, $3.1 million as interests, and $29.1 million as loan repayment.
NEITI pointed out that while NNPC had always confirmed receipt of the payments, it had never shown evidence of remittance to either the Federal Government or to the Federation Account. Instead, the corporation maintained that it had authorization from the presidency to hold the dividends in trust and utilize as directed by the government.
NEITI recommended that NNPC should provide documentary evidence of the authorization to hold the money in trust and to give account of the expenditure from and the status of the $16.8 billion collected in 16 years.
The report disclosed that the volume of crude oil declared lost to theft by 13 operators in 2015 was 27.1 million barrels, amounting to 3.5% of total oil production and valued at $1.4 billion.
While reiterating its call for effective and adequate metering infrastructure and enhanced security of the country’s oil and gas assets, NEITI stated that established loss to theft from 2011 to 2015 is 113.1 million barrels valued at $11 billion.
The report also revealed that Nigeria’s oil and gas revenues plunged from $54.5 billion in 2014 to $24.8 billion in 2015, while the country’s oil production fell from 798 million barrels in 2014 to 776 million barrels in 2015.
The report noted that the total outstanding revenue from the sector as at 2015 was $3.7 billion and N80 billion, while losses incurred stood at $2.2 billion and N60 billion, and unreconciled N317 billion.
The report showed that Nigeria suffered a 54.6% decline in oil revenues but only a slight 2.7% fall in oil production due to drastic reduction in the unit price of crude oil in the global market. It will be recalled that the yearly average price of crude oil per barrel tumbled from $101.91 in 2014 to $52.16 in 2015.
Oil and gas revenues have been declining since 2011 when total revenues peaked at $68.4bn. A five-year analysis in the report revealed that revenues declined by 8%, 7.7% and 6% in 2012, 2013 and 2014 respectively. However, the decline leapt to double digits in 2015 when total revenue dwindled by more than half.
Total oil production also dropped slightly from 798 million barrels in 2014 to 776 million barrels in 2015.
The report attributed the decline to oil theft and militancy. However, total gas production went up by 20.23% from 2, 593,090 mmscf in 2014 to 3, 250, 667 mmscf in 2015. The jump by a fifth was on account of the combined effect of increase in gas utilisation and decline in gas flaring.
According to the report, the total oil lifted in 2015 was 780 million barrels, about four million barrels higher than the amount produced with the balance drawn from previous years. Of the 780 million barrels, the companies lifted 467 million barrels while NNPC lifted 313 million barrels.
NNPC’s lifting were split almost evenly between Federation Export and Domestic Crude Allocation, which accounted for 159.4 million barrels and 153.9 million barrels respectively.
However, only 8.7 million barrels or 5.6% of crude oil allocated for domestic consumption went to the refineries in 2015 on account of the state of the refineries.
“Beyond providing a snapshot of what transpired in 2015, this report reveals money to be recovered, leakages to be blocked, and urgent reforms to be undertaken,” Waziri Adio, the Executive Secretary of NEITI, said.
“The most critical takeaway is the need to expedite, expand and sustain reforms in this still-critical sector of national life.”
The NEITI 2015 Oil and Gas Audit Report is the eighth to be produced since the extractive sector transparency regulator came into being in 2004.