Business

NEITI puts Nigeria’s crude oil earnings at $678bn in 18 years

Export of Nigeria’s crude oil to US hits all time low

A newly released audit report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has put Nigeria’s total earnings from crude oil at $677.9 billion, between 1999 and 2016.

The earnings are said to be from oil fields from the Niger Delta region in 18 years.

NEITI stated this in a statement released on Friday by its Director of Communications, Dr. Orji Ogbonnanya Orji.

The report also included the total financial flows from Nigeria’s oil and gas sector in 2016 into the account of the federation.

According to NEITI, the 2016 audit report was the latest of its audits of financial flows from Nigeria’s oil industry, adding that its calculation showed that the highest revenue of $68.44 billion the country earned from oil came in 2011, while its lowest of $8.07 billion was gotten in 1999.

The agency tabulated the country’s oil earnings within the period, pointing out that in 1999, Nigeria earned $8.07 billion; $15.81 billion in 2000: $15.91 billion in 2001; 2002 was put at $11.87 billion; while 2003 earning was $17.08 billion.

In 2004, the earning was $26.63 billion; 2005 earning was $28.07 billion; 2006 – $44.69 billion; 2007 – $43.79 billion; 2008 – $60.36 billion; 2009 – $30.13 billion; 2010, was $44.94 billion; 2011 was $68.44; 2012 was $62.94 billion; 2013 – $58.08 billion; 2014 – $54.56 billion; 2015 – $24.79 billion and 2016 was $17.05 billion.

According to NEITI, in 2016, there was a decline in earnings by 31 per cent over the $24.79 billion generated in 2015, and a 75 per cent plunge on the sector’s peak earnings of $68.44 billion generated in 2011.

NEITI also noted that the 2016 figure was the lowest in 10 years and the fifth lowest in the 18 years covered by its audit reports so far between 1999 and 2016.

According to the report, the plunge in revenue in 2016 resulted from low oil prices in the global market and reduced oil production in Nigeria, which was caused by disruption of activities, and vandalism of oil assets and spike in crude theft, among others.

The report further stated that yearly average price of crude oil per barrel, was $43.73 in 2016 as against $52.5 in 2015, also added that total oil production in 2016 was 659 million barrels as against 776 million barrels produced in 2015, representing a fall of 15 per cent.

It also stated that losses due to crude oil theft and sabotage rose from 27 million barrels in 2015 to 101 million barrels in 2016, which was an increase of 274 per cent.

“This was aside losses due to deferment, which in 2016 was put at 144 million barrels which also went up by 65 per cent when compared to the 87.5 million barrels in 2015.

“The bombing of the under-water 48-inch Forcados oil loading/export pipeline was one of many major occurrences that befell the industry in the year under review.

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“This incident occurred in February 2016 and the line remained in-operational for seven months. Shell Petroleum Development Company (SPDC) declared force majeure on lifting from Forcados on 21st February 2016. Companies injecting into the Forcados Terminal such as Seplat, Pan-Ocean, Midwestern, Energia, Platform, Pillar, Waltersmith, and Excel shut down production for over 147 days.”

NEITI also noted that the Shell Petroleum Development Company of Nigeria, SPDC, declared force majeure on the Bonny Terminal due to a leak in Nembe Creek pipeline between May and July 2016 while the Nigeria Agip Oil Company, NAOC, declared force majeure on the Brass Terminal between July and August 2016.

The report further explained that Mobil Producing Nigeria Unlimited declared force majeure twice between May and June, as well as July and October 2016.

“This was due to a drilling process disruption and damage to the QIT loading system. MPN’s total production within the four-month period was 4,616,825bbls, which is less than half of what was produced in each month previously as reflected in DPR reconciled sign-off records,” it added.

NEITI noted that after surviving the slump in the global oil market in 2008 and 2009, Nigeria’s oil sector rebounded in 2010 with a 49 per cent increase in total financial flows to $44.94 billion, followed by the peak of $68.44 billion in 2011.

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However, it said flows from the sector have been trending downward since that peak year, in addition to steady decline in oil production, with 866 million barrels produced in 2012; 800 million barrels in 2013; 798 million barrels in 2014; 776 million barrels in 2015 and 659 million barrels in 2016.

It said a breakdown of the payment Nigeria got from oil in 2016 showed that the major earnings for the year came from export and domestic sale of federation crude oil and gas with $7.97 billion; Petroleum Profits Tax (PPT) with $4.21 billion; and royalty oil with $1.57 billion.

According to NEITI, the major highlight of the 2016 report was that for the first time in Nigeria’s history, crude oil produced from Production Sharing Contracts (PSCs) overtook output from the Joint Ventures (JVs).

“In 2016, PSCs accounted for 324 million barrels, while the JVs accounted for 289.1 million barrels, as against the 320 million barrels for PSCs and 375.5 million barrels for JVs in 2015.

“PSCs, a production arrangement introduced in 1993, thus became the leading production arrangement in 2016. The PSCs are mostly offshore, thus insulated from vandalism and sabotage, and are not constrained by adequacy/availability of equity funding by the federation.

“This change in production structure pushes to the fore the need to renegotiate the terms of the PSCs as stipulated in the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 so as to increase government’s take,” NEITI stated.

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We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
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