An audit carried out by the Nigeria Extractive Industries Transparency Initiative (NEITI) has shown that the federal government through the Nigerian National Petroleum Corporation expended N722.3 billion on under-recovery.
Under-recovery is the cost incurred by the NNPC to keep petrol at the approved pump price of N145 per litre.
This was before the federal government reduced the pump price of petrol to N125 per litre.
According to the audit, Nigeria earned $32.63 billion from the oil and gas sector in 2018, a 55% increase on the $20.99 billion earned from the sector in 2017.
A breakdown of the 2018 revenue showed that company-level financial flows into government coffers were $16.6 billion, while flows from sales of federation crude oil and gas accounted for $16.billion.
The NEITI 2018 audit reconciled payments by seventy-one companies and the Nigeria Liquefied Natural Gas (NLNG) that met the materiality threshold set for the exercise. A total of eight government entities were also covered by the audit.
“Out of the $32.63 billion earned from the sector in 2018, the sum of $19.92 billion was transferred [directly] into the federation account, while $5.21 billion and $4.04 billion were transferred into the JV cash call account and Nigerian National Petroleum Corporation (NNPC) designated accounts respectively.
The report further disclosed that $2.10billion was transferred into third parties project financing accounts and $1.37billion were recorded as subnational transfers.
A total of 701 million barrels of crude oil were reported to have been produced in 2018, a slight increase of 1.5% when compared to 690 million barrels produced in 2017.
Total crude oil lifted for export and domestic sales was 701 million barrels.
Analysis of the total lifting in 2018 showed that 255.6 million barrels or 36% were lifted by NNPC on behalf of the federation, while companies lifted 445.5 million barrels or 64% of total liftings.
Further analysis showed that out of 255.6 million barrels lifted by NNPC in 2018, actual sales were 255.3 million barrels valued at $18.2 billion.
Out of the 255.6 million barrels lifted on behalf of the federation by NNPC, a total of 107.63 million barrels was recorded as domestic crude allocation (DCA) in 2018.
Of this figure, 94 million barrels or 87% of the DCA were utilized for direct sale direct purchase (DSDP), while the balance of 13.58 million barrels or 13% was delivered to the refineries.
The report also revealed that in 2018, the total crude oil losses due to theft and sabotage was 53.28 million barrels, an increase of 46.15% when compared to 16.824 million barrels recorded in 2017.
Similarly, the report put total products losses in 2018, due to pipeline breakages at 204,397.07 cubic meters.
On gas production, the NEITI 2018 oil and gas report revealed that the total gas production for the year under review was 2,909,143.69mmscf, while total gas utilization was 2,909,143.55 mmscf.
From the report, $307.20 million was realized from the sales of federation gas of 633.55 thousand metric tons in 2018.
“The national gas reserve stood at 200.79tcf as at end of 2018. This is made up of 101.98 tcf of associated gas (AG) and 98.81 tcf of non-associated gas (NAG). With the 2018 annual gas production quantity, the gas reserves life index (RLI) was estimated at 92 years.”
“Employment in the oil and gas industry accounted for 19,820 employees, 0.03% of the total employment (69.54 million) in Nigeria. In aggregate, employment distribution in the industry was 18% (3,595) female and 82% (16,225) male” the report stated.
This is the 11th cycle of independent oil and gas industry audit exercise by NEITI.
It was conducted by Adeshile Adedeji & Co., (Chartered Accountants), an indigenous accounting and auditing firm.