By Michael Eboh
THE Nigeria Extractive Industries Transparency Initiative, NEITI, has berated the Nigerian National Petroleum Corporation, NNPC, Department of Petroleum Resources, DPR and oil and gas companies operating in the country, for inconsistencies in Nigeria’s crude oil production and lifting data.
This has confirmed claims by stakeholders and transparency watchdogs that the Federal Government does not know the actual volume of crude oil produced in the country, giving room for massive corruption in the industry.
NEITI, in its 2015 Audit Report on the Oil and Gas Industry, disclosed that different crude oil production and lifting records are maintained by the Crude Oil Marketing Division, COMD, of the NNPC, the DPR and oil companies.
According to NEITI, the audit revealed that there are inconsistencies in the record maintained by COMD, DPR and the oil companies, adding that a review of NNPC, DPR and companies’ records shows a variance in the production record by stream.
The report stated that while the DPR records put total crude oil production in 2015 at 780.831 million barrels, NNPC’s record put the output at 780.368 million barrels, a difference of 462,269 barrels. In addition, the report noted that records by oil companies put the total production at 771.198 million barrels, a difference of 9.633 million barrels and 9.17 million barrels compared to the DPR and NNPC’s records respectively.
The report further accused oil companies of doctoring their actual production data, by presenting two different data for the purposes of taxes.
It said: “The companies’ position is the sign off position which is in most cases less than their internal production records as used in their filing with the Federal Inland Revenue Services, FIRS.”
The report noted that all these inconsistencies were an indication of inefficient system and represents huge loss of revenue to the country.
To this end, the report recommended that the DPR carry out real time monitoring of the system, while the COMD should be involved in reconciliation sign off.
It also advised that reconciliation of production and lifting data should be done on timely basis to avoid such situation in the future and save the country from losing revenue.
Furthermore, in another development, the report indicted six companies for failing to provide gas production, thereby depriving the country of certain revenue.
The report listed the companies as Allied Energy, Atlas, Britannia U, New Cross, Prime Exploration & Production Company, and Sheba Exploration & Production.
It also stated that the current gas flared penalty charge at N10 per 1000 metric standard cubic feet had not served as a deterrent to gas flaring by companies.
In addition, the report said, “If the Federal Executive Council, FEC, approved rate of $3.5 per 1000 mscf had been applied in 2015, gas flared penalty would have been $1.11 billion as against the actual collection of $12.683 million, meaning an extra $1.099 billion would have accrued. The outstanding gas flared liability was $11.536 million.”
The report disclosed that the current gas flaring penalty is not sufficient deterrent to the companies to stop flaring gas, adding that the Federal Government is losing huge revenue on the gas flared.
It argued that the new policy on minimal flaring as approved by the Federal Executive Council should be fully implemented, as this would lead to a reduction in pollution rate and enhance government revenue from increased utilization of gas hitherto flared.
“The new policy on minimal flaring as approved by FEC should be fully implemented; this will lead to a reduction in pollution rate and enhance government revenue from increased utilization of gas hitherto flared.
“Covered entities should be encouraged to provide relevant data as at when due to ease reconciliation. DPR should ensure that all applicable gas flared liabilities are paid by the operating companies.
“Government should enforce the new gas flared regime to deter gas flared on the one hand and promote investment in gas utilization and infrastructure development,” it noted.