Breaking News

NEITI indicts NPDC, PanOcean, 7 others for $594m royalty underpayment

Kindly Share This Story:

By Michael Eboh


Abuja — The Nigeria Extractive Industries Transparency Initiative, NEITI, yesterday, accused nine oil and gas companies operating in the country of $594.39 million royalty underpayment to the Federal Government in 2017.

In a statement following the release of its 2017 audit report on the oil and gas industry, NEITI identified the companies as the Nigerian Petroleum Development Company, NPDC, ND Western, Frontier, Dubri Oil, Newcross E&P, Platform, Pan Ocean, Shoreline and Yinka Folawiyo.

According to NEITI NPDC, ND Western, and Frontier were indicted for underpayment of $11.585 million, $6.595 million and $1.807 million gas royalty respectively; while Dubril Oil, NPDC, Newcross, ND Western and Platform were also indicted for the underpayment of oil royalty of $228,569.87, $22.835 million, $13.715 million, $9.366 million and $529,430.87 respectively.

NEITI also disclosed that Panocean, Shoreline and Yinka Folawiyo defaulted in payment of royalty in 2016.

According to NEITI, the non-payment by these companies would result to revenue loss to the federation, while it called on the Department of Petroleum Resources, DPR, to follow up and recover the outstanding sum from the companies.

It added that there was a total underpayment of $677.087 million from seven revenue streams as at 31st December, 2017, with NPDC accounting for 73 per cent of this underpayment.

The report further stated that Nigeria earned $21 billion from the oil and gas sector in 2017, representing a 23 per cent increase from the 2016 figures of $17.05 billion and 15 per cent lower than $24.79 billion inflows recorded in 2015.

Giving a breakdown of the financial flows by revenue streams, NEITI stated that crude oil and gas sales topped with about $10.19 billion, while other financial flows accounted for about $10.13 billion, adding that flows to other entities like the Niger Delta Development Commission, NDDC, Nigeria Content Development Monitoring Board, NCDMB, among others, were $669.05 million.

In a five – year comparison of revenue flows from the oil and gas sector, the NEITI report revealed that “There was a steady decline in year-on-year revenues from 2013 to 2016, with the sharpest drop of 55 per cent in 2015 compared to the preceding year. The year under review experienced a 23 per cent increase in revenues 23 per cent from $17.055 billion in 2016 to $20.988 billion in 2017. In effect, 2017 witnessed a halt in the steady revenue decline the sector has experienced since 2013.

“The report also showed that inflows from the Nigeria Liquefied Natural Gas as dividend, interest and loan repayment were $834 million. This indicates a significant increase of 114 per cent from the 2016 figures of $390 million.”

It added that, “In relation to oil production during the period under review a marginal increase of 4.75 per cent, 690,465 million barrels, mbbls, as against the 659,137mbbls produced in 2016.

“The significant increase in revenues when compared to the increase in production volumes was as a result of the increase in oil prices. The report further pointed out that average crude oil price was higher in 2017. It was sold for an average of $54.44 as against the $43.73 in 2016, and this signifies an increase of 24.5 per cent.”

On production arrangements in terms of volumes, NEITI noted that joint venture, JV, and production sharing contracts, PSC, produced 305mbbls and 303mbbls, while others such as service contracts, marginal fields and sole risks accounted for the balance.

According to the report, Sole Risk operations produced the highest percentage increase of 114 per cent, and Marginal Field operations witnessed an increase of 32 per cent in the year under review.

It stated that, “Overall production from the JV companies increased by 16.199mbbls, indicating a 6% increase from 2016 volumes. On the contrary, PSC and SC operations suffered volume reductions of 6% and 31% respectively”.

“In 2017, the total gas production was 3.495 billion standard cubic feet, SCF, from all arrangements, slightly higher than 2016 production of 3.051 billion SCF by 15 per cent. The total volume of gas flared in 2017 increased by 23 per cent and gas utilization saw a significant jump of 32 per cent when compared to 2016 volumes”.


Kindly Share This Story:
All rights reserved. This material and any other digital content on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from VANGUARD NEWS.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.
Do NOT follow this link or you will be banned from the site!