How FG loses crude earnings to IOCs metering | Nigeria Newspaper- Nigeria News| Naija News

29.6.18

How FG loses crude earnings to IOCs metering

By
 How FG loses crude earnings to IOCs meteringThe Federal Government’s reliance on the International Oil Companies (IOCs) to determine the quantity of oil production is negatively affecting the country’s crude earnings.
The Guardian had reported that the petroleum industry earned $276.642 billion (N84.6 trillion) in the last five years, and only N8.41 trillion of the sum was spent on budget from 2013 to 2017. The nation’s total budget within the period under review was N28.147 trillion.
The Federal Government’s actual share of oil-related revenue was N1.99 trillion in 2013; N1.98 trillion in 2014; N1.64 trillion in 2015; N820 billion in 2016 and N1.98 trillion in 2017.
Findings by The Guardian revealed that the government has no multi-phased, calibrated meters at the oil wellheads, flow stations and export terminals to determine the quantity of crude oil produced and exported by the IOCs.
What this means is that the machines that monitor loading into the vessels are owned, calibrated and operated by the IOCs without any form of supervision or participation by any government agency.
The country, therefore, lacks comprehensive and independently verifiable metering infrastructure, thereby relying only on the information provided by the IOCs or indigenous operators for production figures.
This has raised serious concern over the issues of transparency and accountability in the oil industry regarding the quantity of crude oil production in Nigeria.
Experts, who believed that Nigeria is being short-changed, have questioned the production figures from the operators, which the country has relied on since the beginning of crude oil production in the country.
There have always been discrepancies between what vessels declare to Nigerian authorities and what they declare as originating from Nigeria at the international market.
Oil and gas analysts believe that this method of calculation is easily susceptible to manipulation by merely altering the physical properties of the crude at the export terminal facilities.
An Abuja-based oil and gas analyst, Ifeanyi Izeze, said “this explains why most of the major oil companies have been reluctant to adopt more precise methods, such as metering, due to the very fact that the oil system can be manipulated.
“If not only Nigeria, which other oil-producing country in the world relies on third party reports to ascertain the volumes of crude oil lifting?”
The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Waziri Adio, said ensuring the installation of adequate metering infrastructure in the oil and gas sector operations was top on the agenda of the agency.
He confirmed that due to an inadequate metering system, an accurate measurement of crude production and listings as well as an appropriate computation of taxes and royalties have been difficult, leading to a huge revenue loss to Nigeria.
“Metering is an issue that is very dear to us”, he said. ‘‘NEITI has long established this issue in its first audit of the sector. Since then, we have been pushing, and we will continue to push until the issue is addressed,” he added.
But the Head, Public Affairs, Department of Petroleum Resources (DPR), Mr. Paul Osu, said it was “an anomaly to say Nigeria does not know the quantity of crude oil produced.”
According to Osu, the DPR has achieved a digital technological breakthrough in crude oil accounting through the deployment of National Production Monitoring System (NPMS) platform.
He disclosed that the NPMS platform would track crude oil production real-time, thereby dispelling the allegations that Nigeria does not know how much crude oil it produces and exports.
He explained that the system was set up to achieve a robust data bank for timely information and easy retrieval, improved transparency in hydrocarbon accounting, improve revenue monitory and consistent high-quality data publication.
“NPMS real time technology further allows DPR to carry out independent comparative analysis of submitted production figures without operators’ interference,” he explained.
Meanwhile, crude oil prices have defied the additional output of one million barrels per day (bpd) from members of the Organisation of the Petroleum Exporting Country (OPEC) to maintain rising profile.
For example, the price of global benchmark – Brent crude increased from $76 per barrel to $77.64 a barrel by late hours of yesterday.
The United State’s West Texas Intermediate (WTI) crude also increased from $70 a barrel to $73.78 a barrel on the New York Mercantile Exchange, representing the highest price since 2014.
The price of Nigeria’s Bonny Light crude oil has risen from $75.29 a barrel to $77.77 per barrel, representing $0.13 rise above Brent crude oil.
OPEC ministers agreed on Friday last week to increase crude oil supplies from its members, which it has been capping in order to balance the market and boost prices for the last 18 months.
Though, there was an immediate decrease in the prices of crude oil triggered by the initial announcement, things went back to normal after few hours.
Nigeria was exempted from the production freeze due to its low output profile occasioned by crude oil theft and vandalism.

0 comments:

Post a Comment

Latest News