The Nigerian Extractive Industries Transparency Initiative (NEITI) has announced that Nigeria earned a total of $32.63 billion from the oil and gas sector in 2018. This represents a 55% increase on the $20.99 billion, which was earned the previous year.
This was disclosed in a press statement signed by NEITI’s Director, Communications and Advocacy, Dr Orji Ogbonnaya Orji, and seen by Nairametrics.
The information is contained in the latest oil and gas industry audit conducted by the NEITI, which also announced plans to release the 2019 audit report this year, effectively clearing the backlogs of the audits of the extractive sector and subsequently making the reports more timely and relevant.
The report shows that $16.6 billion of those payments into government coffers was from companies, whereas about $16 billion was from sales of crude oil and gas.
A 5-year trend analysis of receipts from the extractive sector showed that the inflow of $24.8 billion in 2015 represents a 54.6% decrease when compared to the $54.6 billion that was achieved in 2014. It dropped further by 31.2% to $17.05 billion in 2016.
However, it increased by 23% to $20,99 billion in 2017 and also $32.63 billion in 2018 which represents a 55% increase. Those decreases in the first two years were attributed to the crash in oil prices during that period.
The NEITI audit report for 2018 reconciled payments for Nigeria Liquefied Natural Gas (NLNG) and 71 other companies that met the materiality threshold set for the exercise. Eight (8) government establishments were also part of the audit exercise.
The report discloses that the sum of $19.92 billion was transferred directly to the federation account from the total sum earned in 2018, while $5.21 billion and $4.04 billion were transferred into Joint Venture (JV) Cash Call Account and Nigerian National Petroleum Corporation (NNPC) designated accounts respectively. Another $2.10 billion and $1.37 billion were transferred to third parties project financing accounts and subnational transfers respectively.
The report also shows that the total crude oil production for 2018 was 701 million barrels. This represents a 1.5% increase when compared with the 690 million barrels achieved in 2017.
A further breakdown shows that the JVs contributed the highest production of 315 million barrels, followed by Production Sharing Contracts (PSCs) which achieved 270.6 million barrels. Others like Sole Risk, Marginal Fields and Service Contracts accounted for 92.2. million barrels, 22 million barrels and 1.3 million barrels respectively.
NEITI further reported that the sum of N2.2295 trillion was realized as proceeds from sales of domestic crude oil allocation in 2018 with the following deductions:
- N28.3 billion for crude and product losses;
- N138.95 billion for pipeline repairs and maintenance cost; and
- N722.3 billion for under-recovery (which some people refer to as fuel subsidy).
The report also reveals that the total crude oil losses due to theft and sabotage in 2018 were 53.28 million barrels as against the 16.824 million barrels recorded in 2017.
On gas production, the report showed that the total gas production for 2018 was 2,909,143.69mmscf, while the total gas utilization was 2,909,143.55mmscf. The sum of $307.2 million was realized from the sale of federation gas in 2018 as against the $286.85 million which was achieved in 2017. This represents a 7.10% increase.
The report also notes that although the aggregate JV cash call funding for 2018 was $5.98 billion, the outstanding cash call liabilities was $3.66 billion. This is comprised of $3.41 billion legacy liabilities and $260 million performance balance payable to JV operators.
The oil and gas industry contributed 7.8% to the Gross Domestic Product (GDP) in 2018. It contributed $19.13 billion in absolute terms to exports in 2018. This represents 30% of the total exports of $62.49 billion.