Nigeria made about N85 trillion ($236.2 billion) from oil between 2014 and 2018, the 54th edition of Annual Statistical Bulletin by the Organisation of Petroleum Exporting Countries (OPEC), has revealed.

The revenue earned in the five-year period is almost 10 times the 2019 budget of N8.91 trillion signed into law by President Muhammadu Buhari in May.

The figure puts Nigeria in 6th place and the highest oil revenue earner in Africa among the 14 OPEC member countries surveyed in the report.

The highest revenue in the review period was N27.1 trillion ($75.2 billion) recorded in 2014, followed by 2018, when N19.6 trillion  ($54.5 billion) was earned.

N14.8 trillion ($41.2 billion), N9.8 trillion ($27.3 billion) and N13.7 trillion ($38 billion) were earned in 2015, 2016 and 2017 respectively.

Saudi Arabia topped the earners table with $194.4 billion followed by United Arab Emirates’ $74.9 billion, Iraq’s $68.2 billion, Iran’s $60.2 billion and Kuwait’s $58.4 billion.

On volume of crude oil exported, the report said OPEC member countries sold an average of 24.67 million barrels per day (b/d) in 2018, a slight increase of about 14,000 b/d, or 0.1 %, compared to 2017.

The bulk of sales were made to countries in Asia and the Pacific, followed by  Europe and the least exports to North America.

DAILY CRUDE OIL PRODUCTION STILL BELOW BUDGET BENCHMARK

According to the OPEC bulletin, Nigeria’s daily crude oil production in 2018 was 1.601 million b/d, a 4.3% increase from the 1.535 million b/d recorded in 2017.

The largest oil producer in Africa had agreed to cap its output at 1.685 million b/d after reaching agreements with OPEC in January to regulate oil supply in order to drive up prices.

Some other reports have however said Nigeria has been producing above the OPEC quota, although the output still falls short of the 2.3 million b/d target the 2019 budget is benchmarked against.

According to S&P Global Platts survey, Nigeria’s production in May was 1.86 million b/d, a drop from the 1.95 million b/d recorded in April.

This could mean a reduction in estimated revenues for 2019 budget, especially if oil prices remain at the benchmark $60 per barrel or falls in 2019.

Oil theft has replaced the activities of militants, costing the nation trillions of naira, according to a report by Bloomberg.

The report showed that between 2014 and 2019, millions of barrels of crude oil have been lost to theft, with as high as 100,000 barrels stolen daily in the last few months.

Oil theft–seen as the lesser of two evils–  picked up again in 2017 and has witnessed incremental growth, although not up to the levels recorded in 2014.

“On one level, theft is probably a more palatable option for Nigeria and the companies operating there than attacks by militants,” the report read.

“About 100,000 barrels a day are being taken out of pipelines, whereas militancy halted at least eight times times that amount at one stage three years ago.”

Commenting on the trend,  Ledum Mitee, a lawyer and minority rights activist told Bloomberg that oil thieves know they can make money instead of just sabotaging pipelines for political reasons.

“They believe the oil is theirs and the government is the thief. “People now realize that instead of just cutting pipelines to spite the government, they can make money out of it,” Mitee was quoted as saying.

OIL THIEVES ARE OVER 500,000 NATIONWIDE

Described as a booming industry, with less risky implications, the report estimated the  number of oil thieves at around half a million people.

The thieves operate illegal refineries in parts of the Nigeria Delta where stolen crude are kept in hundreds of cauldrons, each of which can hold as much as 150 barrels of oil.

The illegal refineries, called “scaled up versions of widespread gin distilleries” employ about 100 people working in shifts round the clock.

“Yields from a single cauldron will include 7,500 liters of diesel, 2,000 liters of gasoline and 500 liters of kerosene a day. It costs about 4 million naira ($11,100) to construct a boiling pot,” the report said.

Last year, TheCable Petrobarometer did an undercover report exposing the activities of some of the illegal refineries where oil thieves claimed to collude with security officials in order to keep their business afloat.

FG, PRIVATE OPERATORS ON THE RECEIVING END 

Apart from the negative environmental impact and fatal fire incidents resulting from incessant oil theft, the federal government and international oil companies have lost production volumes overtime that have translated to huge financial losses.

Companies like Shell Petroleum Development Company (SPDC), Aiteo Eastern Exploration & Production Company Limited and Chevron Nigeria Limited (CNL) have been affected, leading to several force majeures on the Trans Forcados Pipeline and more recently the Nembe Creek Trunk Line.

Speaking at a strategic review meeting in May, Nuhu Ribadu, chairman of the Petroleum Revenue Special Task Force said the federal government loses as much as $25 million (N7.7 billion) daily and $9 billion (N2.8 trillion) annually to oil theft.

He said the fight against bunkering, piracy, and kidnapping in the “strategic asset base of the country…requires new models of compassionate and workable policy responses.”

The Department of Petroleum Resources (DPR) has revoked five oil mining lease (OML) and one oil prospecting licence (OPL) belonging to five companies.

In a public notice issued on Thursday, the regulatory body said the revocation was based on a presidential directive to “recover legacy debts” owed by the companies operating the licences.

The five companies affected are Pan Ocean Oil Corporation (OML 98); Allied Energy Resources Nigeria, (OML 120 and 121); Express Petroleum and Gas Company (OML 108); Cavendish Petroleum Nigeria (OML 110) and Summit Oil International (OPL 206).

The revoked licenses are located in the onshore, shallow and deepwater areas of the Niger Delta basin.

Pan Ocean is owned by Festus Fadeyi, billionaire businessman, while Allied Energy, which is now known as Erin Energy, has Kase Lawal, founder of Camac Energy, as its chairman.

Express Petroleum, operators of OML 108, is technically managed by Shebah Exploration & Petroleum, a company owned by Bryant Orjiako, chairman of Seplat Petroleum Development Company, while Cavendish Petroleum has Mai Deribe as it’s chairman.

Summit Oil International, operators of OPL 205, also known as the Otien field, was co-founded by the late MKO Abiola.

DEFAULTING COMPANIES OWING ROYALTIES, OTHER TAX PAYMENTS

A recent report by the Nigeria Extractive Industries Transparency Initiative (NEITI) had listed Pan Ocean, Allied Energy among oil companies owing the Nigerian government some royalties in 2016.

The report said, despite being in a Joint Venture (JV) arrangement with government, Pan Ocean did not remit tax payments.

NEITI had urged the DPR to investigate the defaulting companies and ensure that government recover outstanding revenues.

“The non-payment by these companies will result in revenue loss to the federation. It is worthy to note that Pan Ocean did not make any financial payments in 2016, despite being in JV arrangement with the federation,” the NEITI report had read.

Pan Ocean, Allied Energy and Express Petroleum were also listed among 31 companies that defaulted in the payment of Education Tax (EDT) in 2016.

A 2 percent EDT is usually levied on the assessable profits of oil and gas companies operating in Nigeria.

FG TAKES ACTION

In February, Ibe Kachikwu, minister of state for petroleum resources, said the federal government recovered N1.2 trillion in royalty arrears from oil companies operating in the country.

He said the “aggressive royalty recovery” was possible following the launch of new automation processes that track production and shipment of crude oil.

Kachikwu said oil firms yet to remit outstanding royalties to the government at the expiration of the agreed deadline, may have their licences revoked — an action that serves as the ultimate penalty for defaulters.

Following this, the ministry filed a request to revoke the affected licences which led to the presidential order to recover outstanding payments.

In the last four years and even as far back as one would want to go, Nigeria’s oil and gas industry has been an unending subject of controversy as it has been the nation’s cash cow for decades.

Issues in the upstream, midstream and downstream sector– ranging from award of oil licences and contracts, loss of oil revenue from non-application of production contracts, petrol scarcity, subsidy, pipeline vandalism, refinery rehabilitation and a lot more–  have been put on the pedestal with calls for policies and actions that would kickstart industry-wide reforms.

At the heart of these discourses over the past four years has been Ibe Kachikwu, the minister of state for petroleum resources, who arguably seems to have good intentions for the ailing industry.   

A man of many words, the minister is usually at the forefront, mostly representing and speaking on behalf of President Muhammadu Buhari who also doubles as the minister of petroleum resources.

However, it seems that despite his good intentions, some key issues have not been resolved or not gone in the direction that Kachikwu would have hoped they would.

As his tenure — or first term as a minister comes to a close —  here are five times Kachikwu made promises or statements that have either not seen the light of day or did not last all through his stewardship.     

ZERO PETROL IMPORTATION BY 2019

One of the most resounding promises made by Kachikwu in 2017 was that Nigeria will stop importing petrol into the country two years later — by 2019, with the hopes of saving billions of dollars spent on import of the product.

The minister’s promise was pegged two things — first, on the expectation that the 650,000 barrel per day (bpd) capacity refinery by billionaire businessman Aliko Dangote, would come on stream before the end of that year.

Secondly, it was pegged on plans by the Nigerian National Petroleum Corporation (NNPC) to repair the nation’s four refineries within a two-year period, counting from 2017.  

He alluded to the latter instance while speaking at a public hearing on the review of petroleum pricing template for Premium Motor Spirit (PMS) or petrol organised by the house of representatives in February of that year.

Restating his promise with stronger conviction three months later, Kachikwu told BBC that he would resign if the nation has not achieved petrol self-sufficiency by 2019.

“Our target is 2019… don’t worry, I put the date, I’ll work it,” he had told Stephen Sackur on BBC HardTalk.

When asked if he would “walk” if the target is not achieved, the minister said:  “Yes, of course, that is the reason why you are in government.”

As the days went by, it became clear that of the Dangote refinery would take off at a later time (in 2020). Overhaul of the four government-owned refineries was stalled by financial constraints arising from slow negotiations with potential investors who would sink funds into the repairs.

Kachikwu did not resign.

REFINERY UPGRADE  BY 2019

The minister’s assurance that the nation’s ailing refineries would be up and running to at least 90% capacity was said in the same breath as the promise that petrol imports would cease in 2019.

Upon his appointment as minister in 2015, Kachikwu had said if it was left to him alone, the refineries should be sold outright– a move that experts and private sector players in the industry have said is a sure way out of the local refining quagmire that Nigeria has remained in for decades.

“Personally, I will have chosen to sell the refineries, but President Buhari has instructed that they remain. After they are fixed, if they still operate below 60 per cent, then we will know what to do,” he had said at the time.

Although the federal government had argued that fixing the refineries to some extent, before sale, will shore up it’s value, it was revealed by the NNPC last year that $363 million had been spent on turnaround maintenance (TAM) for the refineries in the last 10 years– between 1998 and 2008.

Some industry sources, however, say a huge chunk of the amount was diverted into the pockets of individuals in high places with nothing to show for the maintenance that should have been done on the refineries.

After 19 years in the lurch, the state oil firm announced in March that it had commenced the first phase of rehabilitation of the 210,000 bpd capacity refinery in Port Harcourt, the Rivers state capital.

When the initial phase is completed, the facility is expected to reach just 60%  capacity utilization.

But here again, the minister has had to admit his 2019 target for the refineries could not be achieved.

Speaking on Hard Copy, a Channels TV programme, Kachikwu expressed regrets at the current state of the nation’s refineries.

“If there is one area where I feel sad, it’s the refineries because there is a huge gulf between my pronouncements and where I’d like it to be and what we’ve been able to achieve,” he said.

“The reality today is that we are still below 15% of utilisation of those refineries because they need to maintained, reworked, they almost need to be shut down and completely refurbished.

“Neglect of over a decade is forcing us to say are these scraps or how much will it cost to fix them.

“The 2019 plan is off, there is absolutely no way given that no contractual terms have been reached by the NNPC and the potential investors. So there is no way that you can get refineries to 90% capacity template in 2019 and for us to exit complete importation of petroleum products.”

SUBSIDY REMOVAL, CUT IN PETROL PRICES BELOW N145

In December 2015, Kachikwu had revealed government’s plans to end the fuel subsidy regime which he described as a fraud and said would lead to savings of up to one billion dollars and another one billion saved on fuel importation.

Five months later, the federal government through the minister, announced the removal of subsidy, pegging sale of petrol between N135 and N145 per litre from N86.50 — a decision that signalled an end of subsidy payment to private oil marketers.

The move was met by critcicism with Femi Falana, human rights lawyer, pointing to the fact that continued subsidy payment was a huge campaign message propagated by the Buhari-led administration.

In trying to placate Nigerians, the minister again came up with another assurance that removal of subsidy would in the near term benefit Nigerians as petrol prices would drop.

“As it gets better and it gets to a point where we find that the market has stabilised in terms of supply, we will begin to pull back a bit in terms of determinants for pricing,” he said during a Channels TV programme in December 2017.

“You will be amazed at what will happen to your N145 price because it will go downwards. We mean well and Nigerians should please trust us. Give us a chance, you will be surprised what will become of your PMS price over the next six to eight months.”

But then again the subsidy regime returned after government said landing cost of petrol had increased following crude oil price rally, with the NNPC becoming the sole importer of the product, and bearing the burden of subsidy.

In response to advice by the International Monetary Fund (IMF) to remove subsidy once again, Kachikwu said he will advise the president on the way forward.  

TRANSPARENCY IN OIL CONTRACT BIDS

In what came as a surprise to many,  the NNPC under the leadership of Kachikwu launched a system where annual crude term contracts would be aired on live television.

The first televised bid exercise was witnessed by representatives of the DPR, Bureau of Public Procurement (BPP), Nigerian Extractive Industry Transparency Initiative (NEITI) and Nigerian Content Development and Monitoring Board (NDCMB).

Prior to this, invitations to tender were published in newspapers but the bidding process itself and the contract awards were shrouded in secrecy.

The minister had, however, said the new system was introduced to strengthen the tenets of transparency as the process will be visible to all Nigerians and prevent calls for favours in contract allocation.

“The essence is to ensure that nobody needs to call me personally for him to get crude allocation,” he had said.

“You can imagine the burden the exercise has taken off my shoulders. It means a good amount of my time will now go into other relevant areas of operation where the country needs me most.”

This year, apart from the invitation to tender for the 2019-2020 petrol supply programme on the NNPC website and media reports, not much was seen with regards to the bid process.

Moreso, the state oil firm is yet to produce the list of local and international companies that it awarded contracts, out of the 254 companies that had placed bids in the previous term.

The minister has also been close-lipped about the contract awards in recent times.

KEROSENE TO GAS REVOLUTION

In his early days as minister, and while still the group managing director of the NNPC, Kachikwu had complained that kerosene subsidy was a huge burden on government and vowed to revolutionise domestic cooking fuel or Liquified Petroleum Gas (LPG) by 2016.

Although it seemed like a tall order, Kachikwu’s plan was that by the end of 2016 most of the households in Nigeria would have obtained the free gas cylinders distributed by the NNPC in preparation for the transition from kerosene to gas.

But some three years down the line, kerosene and even the gas that was to replace it as domestic cooking fuel have become more expensive.

When Kachikwu made the promise in September 2015, some fuel retail outlets in the country sold kerosene at the subsidised price of N50 per litre.

Recent data from the National Bureau of Statistics (NBS) show that as at March, the average price per litre of kerosene retails for as high as N327, with Anambra, Ebonyi and Ondo selling at N329.09, 326.83, and 326.67 respectively.

Similarly, the price of cooking gas has almost doubled with some states like Cross River selling for as high as N4,753.57 for a 12.5kg cylinder.

Although missing yet another deadline, the minister is still pushing for a higher LPG penetration in the country.

He says the government has set a target to build at least one gas filling plants across all the 774 local government areas in the country within the next three years.

The house of representatives has re-committed and passed the the petroleum industry governance bill (PIGB) after considering President Muhammadu Buhari’s concerns.

The lower legislative chamber passed the bill on Thursday after removing the provisions Buhari disagreed with.

It said the decision to withdraw the affected clauses in the bill is because the president’s observations are germane for the smooth operations of the bills.

Buhari had rejected the bill, citing constitutional reasons.

He had given three major reasons including: “a) That the provision of the Bill permitting the Petroleum Regulatory commission to retain as much as 10% of the revenue generated unduly increases the funds accruing to the Petroleum Regulatory commission to the detriment of the revenue available to the Federal, States, Federal capital Territory and Local governments in the country.

“b) Expanding the scope of Petroleum equalisation fund and some provisions in divergence from this administration’s policy and indeed conflicting provisions on independent petroleum equalisation fund.

“c) Some legislative drafting concerns which, if Assented to in the form presented will create ambiguity and conflict in interpretation.”

The proposed law, which was conceived to liberalise the governance structure of Nigeria’s oil industry, is one of the four bills in which the omnibus petroleum industry bill (PIB) was broken into by the legislature after over a decade of motion without movement.

The Nigerian National Petroleum Corporation (NNPC) says it remitted N1.26 trillion into the federation account in 2018 as against the projected N1.22 trillion projected in the 2018 budget.

Maikanti Baru, NNPC group managing director, disclosed this during a presentation to the house of representatives ad hoc committee investigating non-remittances of funds to the federation account by the corporation between July 2017 and December 2018.

The presentation took place at the National Assembly Complex in Abuja.

Baru, who was represented by Godwin Okonkwo, managing director, NNPC Capital, said national daily production for the period averaged 1.89 million barrels per day (mbpd); lesser than the proposed 2.3 million barrels per day.

The NNPC GMD said JV cash call arrears are now being managed efficiently to ensure steady inflows to the federation account.

“The current management of NNPC ensures that it contributes to the cost of the production of crude oil and gas in the upstream sector to avoid a repeat of the mistakes of the past. If we had made cash call payments in the past, the arrears that we are liquidating now would not have arisen,” a statement signed by Ndu Ughamadu, NNPC spokesman, read.

“The current situation creates a win-win scenario for the country. The NNPC is strategically saving for the rainy day to make a better future for all of us by liquidating the arrears.”

The state oil firm also dismissed allegations of under remittance by state commissioners of finances, stating that the NNPC “was a going business concern that met financial obligations to its various stakeholders”.

The forum of commissioners of finance of FAAC and the NNPC have been in disagreement over revenue underpayment into the federation account.

In 2018, the FAAC meeting ended in a deadlock four times due to what the committee described as the inability of the NNPC to meet its revenue obligations to the three tiers of government.

Responding to a question on whether the NNPC 2018 audited account was ready, the GMD said that the 2018 audited account would be ready in June, with the backlog of unaudited account cleared.

He attributed the delay to some JV partners that were yet to turn in their budget performance for the 2018 budget cycle.

The federal government says consumers of Liquefied Petroleum Gas (LPG) also known as cooking gas won’t be allowed to own cylinders anymore.

Speaking at a stakeholders’ forum on LPG penetration in Abuja on Tuesday, Ibe Kachikwu, minister of state for petroleum resources, said the government will introduce a policy that would require that the ownership of the cylinders rests strictly with the dealers and distributors.

He said the policy was part of the strategy to deepen LPG penetration and address issues of safety.

Represented by Brenda Ataga, his senior technical assistant, Kachikwu said the government has reached an agreement with two original cylinder manufacturers to deliver 600,000 cylinders to LPG distributors on credit, with a payback period of 18 months.

He said the government will soon commence a clampdown exercise on illegal roadside LPG dealers and advised all skid operators to “immediately convert their outlets to micro distribution centres (MDCs) before the enforcement begins”.

Ataga explained that consumers would only pay for the content of cylinders when the exercise begins.

“The MDCs will essentially create and introduce into the market what we call the cylinder exchange programme, whereby the cylinders are owned by the distributors.

“There is no need for you to decant for anybody that comes in, and that eliminates illegal risks as well.

“You would fill them at the refill plants that would be tied to you and exchange it with your customers because you know your customers already.

“Your customers pay for only the content, while you own the cylinders and control the management of those cylinders.

“It is for us to be able to, at any point in time, discern and discover cylinders that are bad, cylinders that need recertification and cylinders that need to be removed from circulation.

“We put that onus on distributors going forward, to support the safe and standard method of selling LPG.

“I tell you today that Nigeria is the only country in West Africa that does not practice the re-circulation model.

“Everyone has moved away from this because, again, most of the population cannot afford cylinders. So, you have to remove that cost from them.”

In 2015 when he was the group managing director of the Nigerian National Petroleum Corporation (NNPC), Kachikwu had said the government had plans to distribute gas cylinders to households at no cost.

Shell Petroleum Development Company (SPDC) says the Trans Forcados pipeline facility will remain closed after a fire occurred at a section of the installation in Delta state on Sunday.

However, a spokeswoman for the company told Reuters that no force majeure has been declared on exports from the pipeline.

Shell manages the Trans Forcados crude oil terminal while Heritage Energy Operational Services Limited operates the pipeline affected.

Collins Edema, a resident of Yeye community, Burutu local government area of the state said as at Tuesday, the “fire is still raging”.

“The pipeline is long due for replacement and leaks from time to time.

“Repairs were going on there on a leaking portion when the fire broke out, burning the pipeline, the pumping machine and other equipment the contractors were using for repairs.”

Exports from the Trans Forcados terminal estimated at 250,000 barrels a day could be in jeopardy if the shut-in is extended.

In December 2018, the Nigerian National Petroleum Corporation (NNPC) revealed that the country lost about N288 billion ($800 million) due to incessant breaches on the Trans Forcados Pipeline.

A fire oubreak has occurred at a spill site along the Trans Forcados pipeline within the Chanomi Creeks in Yeye community, in Burutu local government area of Delta state.

Sylvester Okoh, general manager, community relations, Heritage Energy Operational Services Limited, operator of the crude pipeline, confirmed the incident to NAN in Warri on Monday.

According to Okoh, the fire incident was reported to have occurred at the crude oil spill site along the Trans Forcados pipeline at the Yeye community around 11pm on Sunday.

“It was gathered that the fire occurred due to excessive heat from a pumping machine which was being used to transfer crude oil from the spill site into a barge,” Okoh said.
“The fire was reported to have destroyed some equipment at the scene. The houseboat and gunboats were safely relocated from the scene of the fire incident.”

Commenting on the incident, Phillip Fianka, chairman of Yeye community, told newsmen in Warri that there was a severe fire outbreak as a result of a pipeline leak.

Evans Etimigba, a official of the Chartered Peace Reconciliator in the Niger Delta has expressed fear that the fire might probably spread to other parts of the community if not put off.

Etimigba called for quick intervention of the relevant government agencies to curtail the inferno.

The Trans Forcados Pipeline is a major trunkline within the Forcados Oil Pipeline System, which is the second largest network in the Niger Delta that transports oil, water and associated gas from fields in the western delta to the Forcados oil terminal.

The terminal has an oil export capacity of 400,000 barrels of oil per day (b/d) with a 31-kilometre pipeline that delivers crude to offshore loading berths for export.

A UK tribunal has ordered the federal government to pay Process and Industrial Development (P&ID), a British firm, $9 billion in damages for an ongoing legal dispute.

The court case arose from a “failed” gas supply and processing agreement (GSPA) awarded the British firm in 2010.

The contract was to process wet gas to power Nigeria’s generating plants.

According to a press statement by P&ID, the GSPA failed when the Nigerian government did not uphold its commitment to the contract.

The company thereafter initiated arbitration proceedings in August 2012, after which a tribunal in London, UK, was formed in January 2017.

The tribunal then ordered the federal government to pay P&ID $6 billion in damages, plus $2.3million in uncollected interest.

“That figure has since been attracting interest at the rate of $1.2 million per day, and currently stands at over $9 billion,” the company said in a statement.

Brendan Cahill, founder of P &ID, said the company looks forward to UK and US courts granting enforcement rights that will allow P&ID to “collect what is rightfully its”.

He said the company was open to negotiations with the Nigerian government to settle the dispute out of court.

“Efforts by Nigeria to evade this judgment will inevitably fall flat. The ball is in Nigeria’s court, if the government is prepared to find a good-faith solution”, the statement quoted him as saying.

“The P&ID project would have supplied 2,000 megawatts of electricity in a country where tens of millions do not have access to electricity. The award judgment was handed down by the independent arbitration panel because it represented the loss of profits for P&ID over the 20 years of the project.

“P&ID remains open to a settlement on a reasonable basis, but we need a willing partner in government to help resolve this matter.”

In February, the office of the attorney-general of Nigeria (AGF) issued a statement contesting the huge amount the court awarded P&ID as damages, largely on the grounds that the project did not actually kick off.

But Cahill had said the company spent “two and a half years on planning, field work, design and on-the-ground preparation.”

The next hearing on the case will come up in a London court, on May 21.