Oil, Gas Sector Generated $17.05b In 2016—NEITI

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Oil, Gas Sector Generated $17.05b In 2016—NEITI

Oil, Gas Sector Generated $17.05b In 2016—NEITI
December 22
05:16 2018

Nigeria generated $17.05 billion from the oil and gas sector in 2016 representing a 31 per cent decline on the $24.79 billion generated in 2015,according to the latest report of the Nigeria Extractive Industries Transparency Initiative (NEITI).

The sector fetched  $68.44 billion for the country in 2011.

The report says the 2016 earnings are Nigeria’s lowest in 10 years and the fifth lowest in the 18 years covered by NEITI’s audit reports so far (1999 to 2016).   It attributed the decline in earnings to  the double whammy of low oil prices in the global market and reduced oil production in Nigeria, which in turn was caused by disruption and vandalism of oil assets and spike in crude theft, among others.

NEITI  Director of  Communications,  Dr. Orji Ogbonnaya Orji, put Nigeria’s annual average price of crude oil per barrel at $43.73 in 2016 as against $52.5 in 2015.

Total oil production in 2016 was 659 million barrels as against 776 million barrels produced in 2015, a fall of 15%. Losses due to crude oil theft and sabotage rose from 27 million barrels in 2015 to 101 million barrels in 2016, an increase of 274%.

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

He said:”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.

“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, Panocean, Midwestern, Energia, Platform, Pillar, Waltersmith and EXCEL shut down production for over 147 days.”
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In addition, SPDC declared force majeure on the Bonny Terminal owning  to a leak in Nembe Creek Pipeline between May and July 2016 while NAOC declared force majeure on the Brass Terminal between July and August 2016.

Similarly, Mobil Producing Nigeria Unlimited declared force majeure twice between May/June and July/October 2016. This was due to a drilling process disruption and damage to the QIT loading system.

The NEITI report stated that:  “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.”

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

However, flows from the sector have been trending downward since that peak year with $62.94 billion generated in 2012, $58.08 billion in 2013, $54.56 billion in 2014, and $24.79 billion in 2015. Similarly, oil production has been on steady decline 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.

NEITI’s audit reports independently reconcile payments by companies against receipts by government agencies, and cover key financial flows such as earnings from sale of federation’s crude oil and gas, sector-specific taxes, fees and levies such as royalty, Petroleum Profit Tax (PPT), signature bonus, gas flared penalty, and other flows such as NDDC contribution, NCDMB levy, NESS fees, education tax and others. Breakdown of the payment shows that the major earnings for 2016 came from export and domestic sale of Federation crude oil and gas with $7.97 billion, PPT with $4.21 billion, and royalty oil with $1.57 billion.

A major highlight of 2016 is  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).

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