The Nigerian National Petroleum Corporation, NNPC, The Department of Petroleum Resources, DPR alongside the oil and gas companies operating in the country, have the come under the ire of the Nigeria Extractive Industries Transparency Initiative, NEITI for inconsistencies in Nigeria’s crude oil production and lifting data, .
This confirms claims by stakeholders and transparency watchdogs that the Federal Government does not know the actual volume of gas and crude oil produced in the country, giving room for manipulations and corruption in the industry. NEITI had in its 2015 Audit Report on the Oil and Gas Industry, disclosed that crude oil production and lifting records are kept by the Crude Oil Marketing Division, COMD, of the NNPC, the DPR, and oil companies in a not so transparent manner.
According to NEITI, the audit revealed that there are discrepancies in the COMD, DPR and the oil companies records, adding that its review of the records was at variance with the production record by the 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, showing a difference of 462,269 barrels, it also noted that records by oil companies put the total production at 771.198 million barrels, showing 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 tax evasion. The report 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.” it that these were manipulations, an indication of an inefficient system that represents huge revenue losses to the country.
To this end, the report recommended that the DPR carry out a real-time audit of the system, while the COMD should be involved in reconciliations and sign off. It also advised that reconciliations of production and lifting data be carried out within set timelines to allow for transparency in future.
The report further indicted six companies for failing to provide gas production data, The companies are Allied Energy, Atlas, Britannia U, New Cross, Prime Exploration & Production Company, and Sheba Exploration & Production.NEITI claims the companies are depriving the country of some substantial revenue. It said that the current gas flared penalty charge of N10 per 1000 metric standard cubic feet has not deterred gas flaring by most companies.
Concluding, the report said, “If the Federal Executive Council, FEC, approved the rate of $3.5 per 1000 mscf had been applied in 2015, gas flare penalty would have been $1.11 billion as against the actual collection of $12.683 million, (which shows that) an extra $1.099 billion would have accrued. The outstanding gas flared liability was $11.536 million.”It disclosed that the current gas flaring penalty is not sufficient deterrent to the companies to stop flaring gas, stating that the Federal Government is losing huge revenue on the gas flared.