By Akanimo Sampson
The Military Writers Society of Nigeria (MWSN) is raising serious concern on alleged huge revenue loss in Nigeria’s extractive industry particularly in the oil and gas sector.
The Society which is concerned with protecting the integrity and respect of the Nigerian military, says Nigeria is losing trillions of naira annually due to inappropriate computation of crude production, taxes and royalties. ‘’This major leakage in the oil and gas sector can only be plugged with an effective metering system’’, the military writers say.
The Society is therefore, charging President Muhammadu Buhari to take concrete action in curbing the worrisome corruption in the oil and gas sector by introducing an efficient metering in the sector.
President of the military writers, Akanimo Sampson, who made the charge in a statement in Abuja on Wednesday night, said Nigeria has been in dispute with big oil corporations over the production sharing revenues from the fields they operate in partnership with the Nigerian National Petroleum Corporation (NNPC).
Nigeria has also been claiming that some of the world’s biggest oil firms operating in the country has been illegally exporting crude oil from the country as they have failed to properly declare the quantities of their exports.
In 2016, Nigeria sued the oil majors, including Chevron, Shell, Eni, and Total, claiming that the foreign oil firms failed to declare $12.7 billion worth of Nigerian oil exports to the United States in the period between 2011 and 2014, The Wall Street Journal reported at the time.
Big oil, which collectively produce around 80 percent of Nigeria’s crude oil, have always denied the claim that they have failed to properly declare their exports, Bloomberg notes.
But in 2019, Nigeria began talks with big oil over the dispute about the production-sharing revenues. Nigeria claims that international oil majors owe it $62 billion in oil revenues because they have not complied with a 1993 law that entitles Nigeria to reap a higher share of revenues if oil prices are above $20 a barrel. The majors are challenging this claim, too.
According to the military writers, ‘’while receiving a delegation from Human Rights Writers Association of Nigeria (HURIWA) led by its National Coordinator, Emmanuel Onwubiko, the Executive Secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), Waziri Adio, promised that ensuring installation of adequate metering infrastructure in the oil and gas sector operations is top on NEITI’s agenda.
‘’Adio noted that due to inadequate metering system, accurate measurement of crude production and liftings as well as appropriate computation of taxes and royalties have been difficult, leading to huge revenue loss to the Nigeria.
‘’He said metering is an issue that is very dear to us. 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’’.
NEITI’s work is about how to make natural resources work for every Nigerian. It is not an issue for a few. It is an issue for everybody. Adio explains that NEITI has the responsibility to ensure transparency, accountability and good governance of Nigeria’s oil, gas and solid minerals sector.
NEITI does this by conducting regular industry audits, disseminating the audit reports, and working with relevant government agencies on remedial issues in the reports.
‘’However, NEITI is regreting the neglect of the solid minerals sector in the past which has led to its underdevelopment and poor regulation despite huge potential for jobs and wealth creation as well as economic diversification’’, the military writers said.
Continuing, they said NNPC has sealed a preliminary agreement with two companies over a dispute about foreign firms exporting Nigerian oil from some offshore fields, which could pave the way to resolving all disputes with international oil majors about oil exports.
NNPC signed the agreement with China National Offshore Oil Corporation (CNOOC) and Nigerian South Atlantic Petroleum (SAPETRO), signifying a major milestone towards the resolution of all disputes related to Oil Mining Lease (OML) 130 Production Sharing Contract.
OML 130 consists of producing fields such as Akpo and the giant ultra-deepwater Egina oilfield. France’s Total, via its Nigerian subsidiary, operates OML 130 with a 24-percent interest, in partnership with NNPC, SAPETRO, CNOOC E&P Nigeria Limited, and Petrobras Oil and Gas BV.
French oil and gas major, Total, says it started up production on December 29, 2018 from the Egina field, located in around 1,600 meters of water depths, 150 kilometers off the coast of Nigeria.
At plateau, the Egina field will produce 200,000 barrels of oil per day, which represents about 10% of Nigeria’s production.
The Floating Production Storage and Offloading (FPSO) unit used to develop the giant Egina field is the largest one Total has ever built.
This project has also involved a record level of local contractors. Six of the eighteen modules on the FPSO were built and integrated locally, and 77% of hours spent on the project were worked locally.
Startup has been achieved close to 10% below the initial budget, which represents more than 1 billion dollars of CAPEX savings, due in particular to excellent drilling performance where the drilling time per well has been reduced by 30%.
President Exploration & Production, Arnaud Breuillac, says “Total is proud to deliver a project of this size under the initial budget and to contribute to the development of Nigeria’s oil and gas sector by generating employment as well as building industrial capability.
‘’Egina will significantly boost the Group’s production and cash flow from 2019 onwards, and benefit from our strong cost reduction efforts in Nigeria where we have reduced our operating costs by 40% over the last four years. Furthermore, some upside potential nearby remains to be developed and we are studying in particular Preowei discovery tie-back to the Egina FPSO.”
Initially discovered in 2003, the Egina field is the second development in production on the Oil Mining Lease (OML) 130 following the Akpo field, which started-up in 2009. The Preowei field is another large discovery made on this prolific block for which an investment decision is scheduled for 2019.
Total Upstream Nigeria Limited operates OML 130 with a 24% interest, in partnership with Nigerian National Petroleum Corporation (NNPC), South Atlantic Petroleum – SAPETRO Ltd. (15%), CNOOC E&P Nigeria Limited, a wholly owned subsidiary of CNOOC Limited (45%) and Petrobras Oil and Gas BV (16%).
Total has been present in Nigeria for over 50 years, both in upstream and downstream activities.
The Group’s production in the country was 267,000 barrels of oil equivalent a day in 2017. It operates five production licenses (OML) on the 34 leases in which the Group has interests (including two exploration licenses).
In addition to OML 130 where the Akpo, Egina and Preowei fields were discovered, Total operates other offshore assets such as OML 99 (40%) where the Ikike discovery is located, OML 100 (40%) and OML 102 (40%) where the Ofon 2 project was completed in 2016.
Onshore, Total is the operator of OML 58 (40%) under its joint venture with NNPC. The Group is also developing Liquefied Natural Gas (LNG) activities with a 15% stake in the Nigeria LNG Ltd company, which operates six LNG liquefaction trains on Bonny Island.
In the downstream sector, Total operates in a leading position with an extensive distribution network of over 550 service stations nationwide and a wide range of top quality energy products and services.
The Group is committed to working closely with its host communities in Nigeria and is supporting many projects in the field of health, education, infrastructure and economic development, through its sustainable development and community relations programs.
With a diverse workforce of several nationalities and cultures working together, Total is proud of its contributions to the socio-economic development of Nigeria.