CRUDE LIFTING: How NNPC, DPR, oil firms cheat Nigeria

The Nigeria Extractive Industries Transparency Initiative (NEITI) has decried data inconsistencies in the production and lifting of oil by Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR), and oil and gas companies operating in the country.

NEITI said in its 2015 Audit Report on the Oil and Gas Industry that the Crude Oil Marketing Division (COMD) of the NNPC, the DPR and oil companies in Nigeria all keep different crude oil production and lifting records.

The disclosure by NEITI may have prove right the claims by stakeholders and transparency watchdogs that the Federal Government has no accurate knowledge of the actual volume of crude oil produced in the country, a situation that has giving room for massive corruption in the industry.

According to the report by NEITI, a look into the NNPC, DPR and other oil companies’ records showed a variance in the production record by stream.

The report explained 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.

Records by oil companies, the report added, 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 also alleged that oil companies are in the habits of doctoring their actual production data, by presenting two different data for the purposes of taxes.

“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),” NEITI report stated.

The report further noted that all the alleged inconsistencies were an indication of inefficient system and represents huge loss of revenue to the country.

The report therfore recommended that the DPR carry out real time monitoring of the system, while the COMD should be involved in reconciliation sign off.

It went a step further to advise that reconciliation of production and lifting data should be done on timely basis in order to save the country from losing revenue and avoid similar situation in the future.

The report meanwhile, indicted six companies for failing to provide gas production, thereby depriving the country of certain revenue.

Companies listed by the report were Allied Energy, Atlas, Britannia U, New Cross, Prime Exploration & Production Company, and Sheba Exploration & Production.

On the current gas flared penalty charge, which currently is N10 per 1000 metric standard cubic feet (mscf), the report said that the charge had not served as a deterrent to gas flaring by companies.

READ ALSO : N4.03tn generated by FIRS from tax in 2017, 720bn more than in 2016- Fowler

“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 millio.

“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,” the report said.

 

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