Revenue generated by Nigeria’s oil and gas sector fell to $17.05 billion in 2016, making it the lowest figure recorded in the last 10 years.
This is according to the Nigeria Extractive Industries Transparency Initiative (NEITI) 2016 Oil and Gas Industry Audit Report which was released on Friday.
In a statement signed by Orji Ogbonnaya Orji, NEITI’s director, communications and advocacy, the drop was attributed to low oil prices in the global market and reduced oil production in Nigeria.
The fall in oil production was further linked to vandalism of pipelines and other major assets in the sector, as well as a rise in crude oil theft occasioned by the affairs of the Niger Delta militants.
According to the report, the average price of crude oil per barrel in 2016 was $43.73 as against $52.5 in 2015.
Oil and Gas Earnings ($Billions)
Total oil production in the review period was 659 million barrels as against 776 million barrels produced in 2015.
This means there was a 31 percent decline in the sector’s earnings from $24.79 billion generated in 2015, and a 75 percent drop from $68.44 billion generated in 2011, leading to a 9.5 percent drop in the sector’s contribution to Gross Domestic Product (GDP).
A break down of the 2016 revenue figures also showed that export and domestic sale of crude oil and gas generated $7.97 billion, Petroleum Profit Tax (PPT) generated $4.21 billion, while royalty oil generated $1.57 billion.
The report revealed that in 2016, crude oil produced from Production Sharing Contracts (PSCs) overtook output from the Joint Ventures (JVs)– the first recorded in the sector’s history.
In the review period, PSCs accounted for 324 million barrels, while the JVs accounted for 289.1 million barrels, (as against the 320 million barrels for PSCs and 375.5 million barrels for JVs in 2015)
“This change in production structure pushes to the fore the need to renegotiate the terms of the PSCs as stipulated in the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 so as to increase government’s take,” the report read.