Nigeria earns $32.63bn from oil, gas sector in 2018 — NEITI

The Nigeria Extractive Industries Transparency Initiatives (NEITI) said Nigeria earned a total of 32.63 billion dollars from the oil and gas sector in 2018.

NEITI disclosed this in the Oil and Gas industry Audit Report released in Abuja, on Monday.

It said that the amount represented a 55 per cent increase on the 20.99 billion dollars recorded in the sector in 2019.

A breakdown of the 32.63 billion dollars earned in 2018 showed that company-level financial flows into government coffers were 16.6 billion dollars, while flows from sales of federation crude oil and gas accounted for 16.billion dollars.

“A five-year trend analysis of the earnings from the extractive sector showed a 54.6 per cent drop from 54.6 billion dollars in 2014 to 24.8 billion dollars in 2015.”

“The earnings further dropped by 31.2 per cent to 17.05 billion dollars in 2016, but increased by 23 per cent to 20.99 billion dollars in 2017 and by 55 per cent to 32.63 billion dollars in 2018.”

Though, the last two years bucked the trend of persisted decrease since 2014, the revenues from the sector in 2018 were still a staggering 40 per cent.

According to the report, this is below the 54.6 billion dollars earned in 2014 when oil prices commenced a precipitous fall.

The 2018 audit reconciled payments by seventy-one companies and the Nigeria Liquefied Natural Gas (NLNG) that met the materiality threshold set for the exercise.

It noted that a total of eight government entities were also covered by the audit.

“Out of the 32.63 billion dollars earned from the sector in 2018, the sum of 19.92 billion dollars was transferred [directly] into the Federation Account.

5.21billion and 4.04billion dollars were transferred into the JV Cash Call Account and Nigerian National Petroleum Corporation (NNPC) designated accounts respectively.

“The NNPC designated accounts are the Naira and dollar accounts where domestic crude sales and the federation equity, royalty, petroleum profit tax and in-kind oil sales are paid into respectively before remittance to the Federation Account,” it said.

“The report further disclosed that 2.10 billion dollars was transferred into third parties project financing accounts and 1.37 billion dollars were recorded as subnational transfers.”

On production, it said that the total crude oil production in the country within the period under review was put at 701 million barrels.

This it said represented a slight increase of 1.5 per cent when compared to 690 million barrels produced in 2017.

A breakdown showed that Joint Ventures (JVs) contributed highest production of 315 million barrels, followed by Production Sharing Contracts (PSCs) which recorded 270.610 million barrels.

Other funding arrangements like Sole Risk (SR), Marginal Fields (MFs) and Service Contracts (SCs) it said accounted for 92.2 million barrels, 22 million barrels, and 1.3 million barrels respectively.

“JV companies’ production increased by 3.12 per cent in 2018 compared to 2017, while PSC operators’ production decreased by 10.90 per cent.”

“Similarly, SR operators’ production increased by 58.72% in 2018 compared to 2017. Production from the SC decreased by 10.27 per cent, while production from MF operators increased marginally by 1.18 per cent,” the report said.

It said that total crude oil lifted for both export and domestic sales in 2018 was 701 million barrels, representing a 1.9 per cent increase when compared with total liftings of 688.3 million barrels in 2017.

Analysis of the total lifting in 2018 according to the report showed that 255.6 million barrels or 36 per cent was lifted by NNPC on behalf of the Federation, while companies lifted 445.5 million barrels or 64 per cent of total liftings.

It noted that the liftings by NNPC indicates an increase of 5.95 per cent when compared to 241 million barrels lifted in 2017.

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 dollars.

“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.”

“Out of this figure, 94 million barrels or 87 per cent of the DCA were utilised for Direct Sale Direct Purchase (DSDP), while the balance of 13.58 million barrels or 13 per cent was delivered to the refineries.”

“Ordinarily, 160.2 million barrels (or 445, 000 barrels per day) should have been allocated for domestic consumption but only 107.63 million barrels or 67 per cent of the customary allocation for domestic consumption was allocated in 2018.”

The report also revealed that the sum of N2.295 trillion was realised as proceeds from sales of domestic crude oil allocation in 2018, out of which the following deductions were made.

“N722.3 billion for under – recovery of imported petroleum products, N28.3 billion for crude and product losses and N138.95 billion for pipeline repairs and maintenance cost.

“The report also revealed that in 2018, total crude oil losses due to theft and sabotage was 53.28 million barrels, an increase of 46.15 per cent when compared to 16.824 million barrels recorded in 2017,” it added

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 2,909,143.69 mmscf, while total gas utilisation was 2,909,143.55 mmscf.

From the report, 307.20 million dollars was realised from the sales of Federation gas of 633.55 thousand metric tons in 2018.

This represents increase of 7.10 per cent when compared to 721.80 thousand metric tons valued at 286, 85 million dollars realised in 2017.

“The national gas reserve stood at 200.79tcf as at the 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,” the report said.