Audit-Report-on-NNPC

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Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) I. Pipeline and Products Marketing Company “PPMC” II. III. NNPC through its fully owned subsidiary, PPMC, supplies only to bulk customers in order to meet the needs for petroleum products and ensure the availability across the country. PPMC is the product distribution arm of NNPC and is directly responsible for the distribution of petroleum products. Petroleum products either imported or refined locally are received by PPMC through pipelines and import jetties and further distributed to depots through pipelines. Department of Petroleum Resources “DPR” DPR is the petroleum agency of Nigeria that regulates the pipeline network and supervises all petroleum industry operations carried out under licenses and leases in the country. One of its major functions is to keep and update records on petroleum industry operations, particularly on matters relating to petroleum reserves, production and exports of crude oil, gas and condensate, licenses and leases as well as rendering regular reports on them to Government. DPR is expected to keep records of the quantities of crude oil pumped at the terminals and quantities imported or delivered to refineries for processing. Independent Surveyors These are inspection agencies which are usually appointed by the buyer/ marketer to inspect the quantity and quality of the product being pumped and transferred to the refineries. Examples of Inspection agencies used are SGS Inspection Agency, General Marine & Oil Services (GMO) Ltd, Konsult Control Services (KCS) and Marine Technical Services International (Nig.) Ltd (MTSI). 4.7.2. Procedures Performed/ Work Done Obtained and reviewed NNPC’s submissions during Senate Hearing on crude oil and refined product losses to understand the claims made. Held a discussion with the Executive Director of Operations “EDO” and Executive Director Commercial “EDC” of PPMC to gain understanding of PPMC’s operations and pipeline network. Obtained and reviewed the schedule of both crude oil and product losses. Reviewed the schedule provided to supporting documents from the Independent surveyors, to ascertain the reasonableness of the claim. Highlighted all discrepancies. Identified the various volume pumped from terminals and volumes received at the respective refinery. Identified discrepancies and obtained clarification where necessary. Obtained the pricing template of the refined product to determine the appropriate rate to value the refined product losses. Obtained the monthly average Platt prices to determine the appropriate rate to value the crude oil losses. Conducted interviews with relevant process owners to validate understanding of deductions in the period under review. Documented findings and conclusions. 4.7.3. Limitations Vanguardngr There were no independent support documents to verify the correctness of the quantities for the refined product losses. The documents used were monthly reconciliation reports of the different PPMC’s operations centers. Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 98
Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 4.7.4. Findings 4.7.4.1. Crude Oil Losses 777,034m 3 of Crude Oil lost during the review period Using the Independent Surveyors <strong>Report</strong> as third party confirmation, it was found that 777,034 cubic meter (over 4.9million barrels) of crude oil allocated to domestic refineries was lost to theft within the review period. Year Pipeline Volume pumped(m 3 ) Volume received(m 3 ) Loss/ Difference (m 3 ) Jan2012 – Dec 2012 Chevron Escravos to WRPC 1,333,646 1,126,286 (207,360) WRPC to KRPC 1,962,557 1,806,784 (155,773) SPDC to WRPC 392,000 384,386 (7,614) Bonny to PHRC 1,629,534 1,490,906 (138,628) Jan 2013 – July 2013 Chevron Escravos to WRPC 756,983 637,525 (119,458) WRPC to KRPC 1,028,210 989,840 (38,370) SPDC to WRPC 424,363 408,749 (15,614) Bonny to PHRC 978,152 883,935 (94,217) (777,034) Table G2: Crude Oil Loss between January 2012 and July 2013 Non-measurement of crude oil lost between oil wells and terminals in the country The Crude oil analysis above only relates to crude oil movement from the terminals to the refineries for domestic production. The country’s production capacity is over 2 million barrels of crude oil per day which is measured at the terminals. The records do not show the actual crude oil production per day from the oil wells which will reflect the country’s actual crude oil production. Identified discrepancies between Independent Surveyors’ <strong>Report</strong> and schedule provided by NNPC We observed some discrepancies between some quantities of crude oil losses stated in the schedule provided by NNPC and that stated on the related Independent Surveyors reports which were provided as support documents. The difference amounted to 328,667 barrels higher than NNPC figures in 2012 and 71,907 barrels lower than the NNPC figures from January to July 2013. The tables below clearly show the discrepancies; Vanguardngr Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 99
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Audit-Report-on-NNPC

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