FG records 30% shortfall in Q1 oil and gas revenue

THE PUNCH Newspaper

Nigeria recorded $5.7bn as revenue from crude and gas oil revenue sales in the first four months of 2010, a report by the Nigerian National Petroleum Corporation has revealed.

The figure, which was below the expected revenue for the period was one of the reasons that compelled the Federal Government to review the 2010 budget downward.

The Appropriation Act had contained a federation equity oil and gas sales estimate of $24.19bn for 2010.

Going by this figure, the expected four months proceeds is $8.06bn and not $5.7bn, as was received from January to April.

This means that the country lost $2.36bn in potential revenue within the period under review.

Also, revenue performance by the Department of Petroleum Resources showed a dismal picture as it had a cumulative generation of N278. 811bn from January to May 31, 2010.

The N278.8bn was earned from royalties paid by the Joint Venture operators; Production Sharing Contracts; royalty (SR/MGL); penalty on gas flaring; concession rentals as well as miscellaneous oil revenues and signature bonuses.

A DPR revenue report dated July 5, 2010, and signed by its Director, Mr. W.A Obaje, showed that the Federal Government, in the 2010 budget projected N847. 72bn as revenue from oil and gas in the first five months of 2010.

The NNPC document signed by the Group Executive Director, (Finance &Accounts), Mr. M.A Arokkodare, and dated June 28, 2010, contained details of the “revenue performance for fiscal year 2010.”

Only figures for four months are in the document, which also revealed that NNPC spent N626,05bn on “crude purchase for domestic consumption.”

The corporation prepared the document for the attention of the House of Representatives Committee on Finance.

Further details show that equity crude sales alone netted $3.3bn between January and April when the barrel price averaged $78.76.

The total quantity of equity crude produced during the period was 42, 116, 209 million barrels. In January, 11,003,844mbbls were produced while daily production averaged 354,962.71 barrels.

In March, crude oil sold for $80.37 per barrel. With a total production quantity of 13,106,152bbls, Nigeria generated the highest of $1.053bn in the four months in March.

Although in April, the product sold for $84.59 per barrel, total production quantity was 7,484,723mbbls, leaving the revenue for the month at $633.188m.

According to the document, January revenue stood at $836.66m, while that of February was $793.88m from equity crude.

The MCA crude sales totalled, $608.2m while Ekanga Zafiro crude sales was $58.2bn; Forcados condensate exports, $35.8m; and “PSC crude oil lifting for PPT/FIRS payments,” $1,093,221,716.

Crude oil lifting for the NNPC/MPN JV satellite fields projects accounted for $145.4m.

Gas (NGL) revenue export amounted to $151.060m; gas revenue from domestic market $14.3m; and NLNG feedstock, $366.586m.

According to the NNPC, it purchased 13,064,819mbbls for N141.170bn in January.

In February, it paid N124.077bn for 11,354,196mbbl and in March, it spent N189.433bn on domestic crude.

The figure for April was N171.367bn for 14,053,888mbbls. The total quantity bought for the four months stood at 54,606,190mbbls.

The report, which was signed by the NNPC Group Executive Director, Finance and Accounts, Mr. M.A. Arokodare, shows that the corporation’s account for 2009 was still being audited.

It further stated, ”The approved 2010 Appropriation Act budgeted the sums of $24.19bn and $6.41bn as equivalents of government’s revenue from equity crude/gas sales and funding of government’s equity portion of the JVC calls respectively.”

However, the corporation admitted recording N478bn as operating deficit in 2008 alone and also gave indication that the picture was likely to deteriorate in 2010 in their audited accounts.

Part of the report reads, “In 2008, the corporation recorded an operating deficit of N478bn.

“Given the current sources of income for the corporation and the operating environment, we regret to inform you that this kind of position may likely repeat itself in 2009 and 2010.

“We however anticipate that with the passage of the Petroleum Industry Bill currently before the National Assembly, the full deregulation of the downstream sector of the petroleum industry and improved security, this negative trend will be reversed.”

The DPR document, which also contains a list of 23 crude oil production terminals, shows that 346,947,403 barrels of crude oil were produced from January to May.


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