THE latest report by the Extractive Industries Transparency Initiative (NEITI) on crude oil sale presents a marked difference from the figures declared by the Nigerian National Petroleum Company Limited (NNPCL) in its audited account, findings by The ICIR have shown.
In its 2023 audited financial statements released in August, the NNPCL said it reported an increase in crude oil sales relative to the previous year.
Its crude oil sales rose from N3.53 trillion in 2022 to N14.07 trillion in 2023.
It used an overall foreign exchange rate of N846.92 and N507.43 per dollar to translate its accounts to naira in 2023 and 2022, respectively.
The crude oil sales were from sales of utilised crude during the year and liftings of equity interest in various oil assets, NNPCL disclosed in the audited report.
Contrary to NNPCL’s audited account, NEITI, in its 2022/2023 Independent Oil and Gas Industry Report released on Thursday, September 26, stated that crude oil sales by the state-owned oil firm declined in 2023 relative to 2022.
According to NEITI, the total crude oil sold by the NNPCL was $16.467 billion in 2023, compared to $18.106 billion in 2022.
“The US$1.639 billion is the impact of the increase in lifting because of increased production despite the decrease in the average crude oil price,” NEITI explained.
At the presentation of the report on Thursday, NEITI’s Executive Secretary, Ogbonnaya Orji, remarked that the report provides valuable insights that would help guide policy, encourage robust public debate and improve governance in the management of natural resources
“The importance of this cannot be overstated. It serves as an authoritative document that provides comprehensive data and information on revenues, governance structure, operations and compliance within the oil and gas sector for the 2022/2023 period,” Orji said.
While the NNPCL declared a staggering 298.71 per cent increase in crude oil sale, NEITI report showed otherwise that crude oil sold by the NNPCL declined by 9.05 per cent in the review period.
The seemingly contradiction raises quite a number of concerns for stakeholders who should rely on the reports to make informed decisions, hence the need for the NNPCL to provide clarification.
Analysing NEITI’s report
A cursory look at the report shows that despite the increase in volume, crude oil sales value declined.
In 2023, the NNPCL sold 196.344 million barrels of crude oil relative to 176.012 million barrels in 2022.
It puts the annual average selling price of crude oil by the NNPCL at $83.61 per barrel in 2023, declining from the $103.63 per barrel average in 2022.
The NEITI attributed the decline to a general downturn in global oil prices throughout the review period, highlighting the need for the government to implement strategies aimed at optimising revenue generated from the oil sector.
“Such measures are crucial for maintaining financial stability and ensuring sustainable development in the face of volatile market conditions,” NEITI stated.
The monthly average crude oil selling price was highest in September at $94.65 per barrel and lowest in June at $74.61 per barrel.
A global comparison of NNPCL’s monthly average crude oil selling prices in 2023 shows that the crude oil prices were higher than other international institutions’ pricing frameworks for seven months.
For the remaining five months, NNPCL pricing was still higher than the United States West Texas International (WTI).
“This implies that the NNPC Limited pricing framework was considerably not below the global average; this gives further revenue assurances,” NEITI stated.
ECA remains deflected amid huge budget deficit
With an oil price benchmark at $70 per barrel in the 2023 budget, the excess from the crude oil prices should have revved Nigeria’s excess crude account (ECA).
However, the balance in the ECA, which stood at $473,754 million as of January 17, 2023, remained at the same figure as of December 2023, according to figures from the Federation Account Allocation Committee.
In the 2023 fourth quarter statistical bulletin of the Central Bank of Nigeria (CBN), the Federal government’s fiscal deficit rose to N12.9 trillion.
The deficit reflected the widened gap between the government’s revenue and expenditure profiles, with revenue roughly at N6.0 trillion, far below its N18.8 trillion expenditure.
Oil companies’ debts stood at $6.175 billion
A further check on the NEITI report reveals a $6.175 billion outstanding liabilities owned to the Nigerian government by companies in the oil and gas sector.
The debt comprises $6.072 billion and N66.378 billion (equivalent to $102,765) due to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Federal Inland Revenue Service (FIRS).
Credit: The ICIR
