Crude Swap: Nigeria Earned $62.9b In 2012 – NEITI | Independent Newspapers Limited
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Crude Swap: Nigeria Earned $62.9b In 2012 – NEITI

Posted: Jun 10, 2015 at 2:38 am   /   by   /   comments (0)

By Obas Esiedesa –  Abuja


The Nigeria Extractive Industries Transparency Initiative (NEITI), on Tuesday in Abuja, noted the increasing public concerns over fraudulent activities in the management crude oil swaps over the years.

For example, NEITI said its audit of the oil and gas sector for 2012 showed that the nation lost about $100 million in swap deal involving the exchange of crude from domestic allocation for refined petroleum products.

The audit report showed that crude oil worth $6.4 billion was swapped in 2012, while the value of refined products was $6.3 billion, bringing total revenue loss to the Federation Account from 2009 to $500 million.

NEITI’s Director of Communication, Ogbonnaya Orji, who spoke at a World Bank funded workshop for civil society engaged in the oil and gas sector, noted that asides the loss, “the value of the refined products not delivered at all under this arrangement stood at N78.8 billion.

“The revenue loss to the nation on crude swap especially at the depot on fuel alone during the same period stood at N11.7 billion or $74.3 million depending on the exchange rate used.”

The report showed that Nigeria earned a total of $62.9 billion in the year 2012, comprising $30.3 billion from crude oil and gas sales, $26.9 billion from taxes, royalties, rents and $5.6 billion as revenue flows to states, local governments and other entities.

It revealed that the aggregate unresolved difference with respect to all the financial flows in 2012 was $47.5 million, representing 0.075 per cent of total financial flows from all sources when compared to 0.14 percent recorded in 2011.

The report further disclosed that about N1.3 trillion was processed for payment as subsidy to oil marketers, while the sum of N690 billion was actually paid during the period.

A total of 862.7 million barrels was also recorded as fiscalised crude oil production at an average daily rate of 2.36 million barrels per a day.

A comparative breakdown showed that the amount from crude export sale declined to $21.6 billion from $24.7 billion in 2011, representing a 13 per cent decrease. Also, domestic crude sale value declined to $18.15 billion from $18.36 billion in 2011, a 1.0 per cent decrease.

Gas sales also declined to $489 million from $610.8 million in 2011, down by 20 per cent.  Feed stock however grew to $1.84 billion under the period from $1.82 billion in 2011.

The report noted that “previous audit cycle witnessed a steadily increasing trend in the total Financial Flows to the federation from $30.129 billion in 2009, to $44.944 billion in 2010, and $68.442 billion in 2011.

“However, there was a decline of eight per cent in 2012 to $62.944 billion. The decrease in 2012 was largely due to a drop in the sales revenue from crude oil and gas attributable to reduction in production and lifting volumes as a result of the following: crude theft, deferred production due to destruction of production facilities and crude losses resulting from sabotage and pipeline breakages.”

According to the audit, Nigeria lost over 23 million barrels of crude valued at over $2.6 billion in 2012 alone.  The breakdown shows: Nigerian National Petroleum Corporation (NNPC) lost over 13 million barrels of crude valued at about $1.5 million. Three International Oil Companies sampled, lost over 10 million barrels of crude valued at $1.2 billion.

Speaking to **Daily Independent** on the deficiency in the crude swap process, former President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Babatunde Ogun, noted that crude ought to be allocated to refineries directly and not to Petroleum Products Marketing Company (PPMC) for onward supply to the refineries.

According to him, “the major problem is the lack of transparency in the operation of oil and gas system. You will discover that the NNPC is saddled with too much responsibilities and one overlapping the other.

“In the first place crude is supposed to be allocated to refineries and not to PPMC who later gives to refineries but if there is a problem that the refineries are not working then what is supposed to be done is to work out a better arrangement that is transparent.”