Audit-Report-on-NNPC

Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013)
4.1. Total Crude Oil Lifting
4.1.1. Introduction
4.1.1.1. Overview
This review addresses three (3) key areas; outcome of the Senate Committee hearings, the total crude
oil liftings by NNPC from all terminals in the period and the total revenue generated from crude oil
for the Federation in the period from January 2012 to July 2013.
The Chairman of the Senate Committee, Senator Ahmed Makarfi CON, requested stakeholders
associated with the allegation to submit information/documents that would shed more light on the
supposed unremitted oil revenue. We reviewed the submissions made by the following stakeholders;
Nigerian National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS),
Department of Petroleum Resources (DPR), Nigerian Petroleum Development Company (NPDC),
Mobil Producing Nigeria Limited (MPN) and Total E&P Nigeria Limited.
As total revenue generated is a function of the total crude oil liftings in the period, we also examined
lifting records from various sources to ensure completeness of the lifting volumes as well as the
associated revenues.
4.1.1.2. Equity Crude Oil
This refers to the Federation’s equity interest in crude oil production sold to approved crude oil
traders. This crude oil, which is exported with revenues accruing directly to the FGN, includes crude
oil that is lifted as the FGN’s share under Joint Venture (JV) and Production Sharing Contract (PSC)
arrangements.
Export crude oil sales are handled by the Crude Oil Marketing Division (COMD) of the NNPC. These
sales are made to approved Oil and Gas trading and marketing companies at commercial prices
benchmarked against international market prices as tracked by Platts 14 .
4.1.1.3. Domestic Crude Oil
Domestic volume of crude oil lifted relates to the 445,000 barrels of crude oil allocated to NNPC per
day out of the total crude oil production of the country for the purpose of domestic consumption. It is
worthy to note that the 445,000 barrels per day was derived from the installed capacity of the four (4)
local refineries situated at Port Harcourt (two refineries), Warri and Kaduna.
However, due to the fact that the local refineries operate at levels significantly below the installed
capacity, the NNPC in addition to what is allocated to refineries designed ways to ensure there is
availability of refined products for sale to local consumers. The various ways include:
1. Product exchange (swap) transactions
2. Offshore Processing Arrangements
3. Allocation to local refineries
4. Outright sale
Vanguardngr
14
Dated Brent pricing information as recorded by Platts is used as the benchmark. A spread above (or below) this
benchmark known as the Official Selling Price (OSP) is advised by the COMD every month and applied in determining the
price to be paid by buyers of crude.
Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation.
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