Neiti Oga 2021 Report

THE PRESIDENCY

NEITI 2021

OIL AND GAS

INDUSTRY
REPORT
THE PRESIDENCY
NEITI 2021
OIL AND GAS

INDUSTRY
REPORT
Nigeria
Extractive
Industries
NEITI 2021 OIL AND GAS INDUSTRY REPORT Transparency

Initiative
First published 2023
ISBN: 978-978-781-878-7
Published by NEITI Secretariat, NEITI House. Abuja.
For more information, contact:

The Communication Department
Nigeria Extractive Industries Transparency Initiative (NEITI)
121 Danladi Kifasi Street, Wuye,
Abuja –Nigeria.
Telephone: 09-2910362, 2906623
Email: [email protected]
Website: www.neiti.gov.ng
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The Report and all appendices relating to the report are intended for the use of the
National Stakeholder Working Group (NSWG) of NEITI for the purpose of that initiative,
and any reliance placed upon them by third parties shall be in accordance with the NEITI
Act of 2007.
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Table of
Contents
Table of Contents ii
List of Figures vi
List of Tables vii
Abbreviations and Acronyms x
EXECUTIVE SUMMARY 4
EXECUTIVE SUMMARY
1. Background 5
2. Objectives 5
3. Scope and Materiality 5
4. Key Highlights of the 2021 Oil and Gas Audit Report 6
FULL REPORT 8
1 CHAPTER 1 - INTRODUCTION 9
1.1. Background - NEITI 9
1.1.1. The NEITI 2021 Oil & Gas Report 9
1.2. Objective 9
1.3. Basis and Period of Reporting 9
1.4. Scope of Work 11
1.4.1. Materiality for the Report 11
1.4.2. Government Entities 16
1.5. Work Approach 17
1.5.1. Nature and Extent of Work Done 17
1.5.2. Data Collection 17
1.5.3. Level of Disaggregation 17
1.5.4. Reconciliation and Investigation of Discrepancies 18
1.6. Data Quality & Assurance 18
1.7. Findings, Observations and Recommendations 20
2 CHAPTER 2 - THE OIL AND GAS SECTOR IN NIGERIA 21

2.1. Legal Framework and Fiscal Regime 22
2.1.1. Legal and Institutional Framework 22
2.1.2. Fiscal Regime 24
2.2. Contracts, Licences and Leases in the Nigerian Oil and Gas
Industry 27
2.2.1. Contracts and License Allocation 29
2.2.2. Bidding Rounds Process for Award of Petroleum Licences 30
2.2.3. Licences and Leases granted in 2021 30
2.3. Register of Licenses 32
2.4. Disclosure of Contracts & Licences 32
2.4.1. Government Policy & Legal Framework 32
2.4.2. Beneficial Ownership (BO) 33
2.4.3. Beneficial Ownership Definition 33
2.4.4. Government Policies on BO Disclosure in Nigeria 34
2.4.5. Beneficial Ownership Data Collected from Covered Companies 34
2.5. State Participation 34
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2.6. Legal Framework of NNPCL 35
2.6.1. Operations, Structure and Governance of NNPC in 2021 37
2.6.2. NNPC’s Financial Relationships/Transactions in 2021 and post
passage of PIA 38
2.6.3. Federation Resource Assets Held by NNPC in 2021 40
2.7. Observations, Findings and Recommendations 44
3 CHAPTER 3 - EXPLORATION, PRODUCTION AND EXPORT 46

3.1. Exploration 47
3.2. Production and Exports 47
3.2.1. Crude Oil Production and Exports 48
3.2.2. Gas Production 52
3.2.2.1. Gas Utilisation 55
3.2.3. Other financial flows to the Federation 55
3.2.4. Non-Financial Flows 59
4 CHAPTER 4 – REVENUE COLLECTION AND RECONCILIATIONS 76

4.1. Revenues Covered in the Report 77
4.2. Revenue from Sales of Crude Oil, Gas and NLNG Feedstock 78
4.3. Payment Reconciliation between Companies and Government
Entities 79
4.4. Summary of Reconciled and Unilaterally Disclosed Revenue Flows
by Streams 79
4.5. Summary of Revenue Collection from the Oil and Gas Sector 89
4.6. Ten-Year Trend of Total Financial Flows 91
4.7. Distribution of Revenues from the Oil and Gas Sector 92
4.8. Outstanding Liabilities Due to the NUPRC and FIRS 94
4.9. Observations, Findings and Recommendation 94
5 CHAPTER 5 – CASH CALLS 96

5.1. Cash-Call Management 97
5.2. Joint Venture ( JV) Partners 97
5.3. Cash Call Process 97
5.3.1. NAPIMS’ Cash Call Payment Process 98
5.3.2. Cash Call Budget for 2021 99
5.4. Cash–Call Funding 101
5.5. Cash-Call to JV Operators 104
5.6. Cash-Call Liabilities 105
6 CHAPTER 6 – DOWNSTREAM OPERATIONS 108

6.1. Domestic Crude Allocation and Utilization 109
6.1.1. Subsidy Regime for Premium Motor Spirit (PMS) 110
6.1.2. Direct Supply Direct Purchase (DSDP) Arrangement 110
6.2. Refinery Balances 113
6.2.1. Port Harcourt Refinery (PHRC) 113
6.2.2. Warri Refinery (WRPC) 114
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6.2.3. Kaduna Refinery (KRPC) 118
6.3. Products Supplied (Imported) 118
6.4. Observations, Findings and Recommendation 118
CHAPTER 7 – INFRASTRUCTURE PROVISIONS, BARTER ARRANGEMENT,

7 SOCIAL AND ECONOMIC SPENDING 120
7.1. Infrastructure Provisions and Barter Arrangements Direct Sale
Direct Purchase (DSDP) Arrangement 121
7.2. Quasi-Fiscal Expenditures 122
7.3. Social Expenditure 122
7.4. Contribution of the Industry to the Economy 125
7.4.1. Contribution to the Economy 125
7.4.2. Contribution to GDP and Exports 125
7.4.3. Contribution to Government Revenues 125
7.4.4. Contribution to Employment 126
7.5. Environmental Impact of the Industry’s Activities 126
7.5.1. Environment Regulatory Agencies 127
7.5.2. NUPRC Environmental Monitoring Process 129
8 CHAPTER 8 – OUTCOMES AND IMPACT 137

8.1. Observations, Findings and Recommendations of the 2021 oil and 138
gas report
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List of
Figures
Figure 1 The Audit Phases and Deliverables
Figure 2 2021 Production Contract Arrangements
Figure 3 Bidding Rounds Process Summary
Figure 4 Marginal Field Award Process for the Bid Round Initiated in 2020
Figure 5 Flow of Oil and Gas Revenue from NNPC’s Operations into the
Federation Account Pre-passage of PIA
Figure 6 Flow of Oil and Gas Revenue from NNPC’s Operations into the
Federation Account Post-passage of PIA
Figure 7 Flow of Production to Exports
Figure 8 A Five-Year Trend of Crude Oil Production in Nigeria (2017 - 2021)
Figure 9 A Five-year Trend of Crude Oil Losses in Nigeria (2017 - 2021)
Figure 10 Five Year Trend of Crude Oil Lifting
Figure 11 Five-Year Trend of Gas Production (2017- 2021)
Figure 12 Revenue Distribution
Figure 13 Federation Revenue Sharing Formula
Figure 14 Cash-call Payment Process
Figure 15 Cash-call Budgeting/Funding Process Flow Chart
Figure 16 Monthly Cash-call/Expenditure Returns Process Flow Chart
Figure 17 Five-Year Trend of Domestic Crude Allocation
Figure 18 Stages of Environmental Monitoring
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List of
Tables
Table 1 Key Highlights of the 2021 Oil and Gas Audit Report
Table 2 Average Exchange Rate by CBN
Table 3 NNPC/FAAC Monthly Exchange Rates for 2021
Table 4 A Description of Revenue Streams
Table 5 Summary of Reconciliation Position
Table 6 Companies Covered in the Report
Table 7 Government Entities Covered by the report
Table 8 Responsibilities of Key Government Entities
Table 9 Nigeria’s Oil and Gas Fiscal Regime in 2021
Table 10 Licences/Leases Issued in 2021
Table 11 List of Companies that Did Not Provide Details Of Natural Person(s)
Table 12 NNPC Subsidiaries in 2021
Table 13 Federation’s 2021 Upstream Petroleum Operations Joint Venture Arrangements
Table 14 Producing PSC Blocks
Table 15 Non-producing PSC Blocks
Table 16 Inactive Producing PSC Blocks
Table 17 Carry Agreements Between Federation (NAPIMS) and Some of its Partners in The
JOAs
Table 18 Outlook of Other Key Projects by NNPC and Partners
Table 19 2021 Crude Oil Production by Companies
Table 20 Comparison of 2021 and 2020 Fiscalised Crude Oil Production by
Arrangements
Table 21 2021 Percentage Contribution to Crude Oil Production
Table 22 Fiscalised Crude Oil Production by Terminal, Stream and Percentage
Contribution
Table 23 Federation Entitlement from JV Production Arrangement
Table 24 Crude Oil Losses
Table 25 Crude Theft by Terminal
Table 26 2021 Crude Oil Production Deferments
Table 27 Total Crude Oil Lifting
Table 28 Total Crude Oil Lifting by Arrangements
Table 29 Summary of Crude Oil Export Sales and Receipts on Behalf of the Federation
Table 30 Summary of Domestic Crude Oil Sales and Receipts on Behalf of the Federation
Table 31 Total Gas Production per Arrangement
Table 32 Federation Entitlement from JV Production Arrangement (MMSCF)
Table 33 2021 Gas Utilisation
Table 34 Comparison of Gas Utilization Between 2020 and 2021
Table 35 Federation Entitlement from JV Gas Sales
Table 36 Summary of Gas Sales and Receipts on Behalf of the Federation
Table 37 Other financial flows to the Federation
Table 38 Summary of PSC, SC and JV (AF) In-Kind Lifting by NNPC for FIRS and NUPRC
Table 39 Summary of MCA Gas In-Kind Lifting by NNPC
Table 40 Sales of Federation Crude Oil and Gas
Table 41 Total In-Kind Payments
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List of
Tables
Table 42 Summary of Reconciled and Unilaterally Disclosed Revenue Flows by Streams

Table 43 Summary of Revenue Streams by Company
Table 44 Summary of Revenue Collection from the Oil and Gas Sector
Table 45 Ten-year Aggregate Financial Flows
Table 46 Analysis of Total Revenue and Remittance to the Federation
Table 47 Summary of Outstanding Liabilities Payable to the NUPRC and FIRS
Table 48 OPCOM Approved Budget for Joint Venture Operation
Table 49 Summary of Joint Venture Cash-call Bank Accounts (2021)
Table 50 Cash-Call Payment (US$ and NGN Bank Statement)
Table 51 Comparison of NUIMS Outstanding Cash Call Schedule with 2021 NAPIMS AFS
Table 52 Pre-2016 JV Cash Call Repayment Arrears
Table 53 Table 53 - Monthly Domestic Crude Allocation
Table 54 Table 54 -2021 Monthly Analysis of DSDP Crude Oil Export (Volume and Value)
Table 55 2021 DSDP Monthly Product Received (Volume and Value)
Table 56 Total Subsidy for 2021
Table 57 Petroleum Subsidy Payment Trend (2006-2021)
Table 58 PHRC Refinery Balance (Crude Material Balance) MBBLS
Table 59 PHRC Refinery Balance (Finished Products) MT
Table 60 PHRC Refinery Balance (Unfinished Products) MT
Table 61 PHRC Refinery Balance (Consumption and Losses) MT
Table 62 WRPC Refinery Balance (Crude Material Balance) (BBLS)
Table 63 WRPC Refinery Balance (Finished Products) MT
Table 64 WRPC Refinery Balance (Unfinished Products) MT
Table 65 Table 65 - WRPC Refinery Balance (Consumption and Losses) MT
Table 66 KRPC Refinery Balance (Crude Material Balance) BBLS
Table 67 KRPC Refinery Balance (Finished Products) MT
Table 68 KRPC Refinery Balance (Unfinished Products) MT
Table 69 KRPC Refinery Balance (Consumption and Losses) MT
Table 70 Products Supplied (Imported)
Table 71 Summary of Mandatory Social Contributions
Table 72 Summary of Non-Mandatory Social Expenditure
Table 73 Contribution of the Oil and Gas Sector to Export
Table 74 Summary of Employment by Companies/NNPC (Occupational Level)
Table 75 Summary of Employment by Companies/NNPC (Nationality/Origin)
Table 76 Oil Spill Data Summary 2021/2020 NOSDRA Oil Spill Monitor
Table 77 Observations and Recommendations for 2021
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List of
Appendix
Appendix 1 Scoping Study Report

Appendix 2 Terms of Reference for 2021 Oil and Gas Audit
Appendix 3 2020/2021 Marginal Field Bid Round List of Applicants
Appendix 4 2020/2021 Marginal Field Bid Round Evaluation Criteria
Appendix 5 2020/2021 Marginal Field Bid Round Awardees
Appendix 6 Payment of Signature Bonus for Marginal Fields
Appendix 7 2021 JDZ Report
Appendix 8 Crude Production Per Project, Per Company
Appendix 9 Crude Oil Lifting By Companies and Terminals
Appendix 10 2021-2023 Crude Term DSDP Contract Holders
Appendix 11 Methodology for Pricing of Nigerian Crude Oil
Appendix 12 2021 Crude Oil and Gas Lifting Profile
Appendix 13 Gas Production Per Project, Per Company
Appendix 14 Pricing Formula for Gas
Appendix 15 Miscellaneous Revenue
Appendix 16 Pipeline Transportation Fees
Appendix 17 Outstanding Liabilities Due to FIRS and NUPRC from the Covered Entities
Appendix 18 Social Expenditure
Appendix 19 Employment Data Reconciliation Report
Appendix 20 NNPC Group Audited Financial Statements 2021
Appendix 21 NAPIMS Audited Financial Statements 2021
Appendix 22 NNPC Deductions from Crude Oil and Gas Sales
Appendix 23 Project Level Reporting for Payments
Appendix 24 Report on Proceeds of Federation Crude Oil and Gas Sales
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Abbreviation and
Acronyms
Abbreviation Description
ACCA Association of Chartered Certified Accountant
AENR Agip Energy and Natural Resources (Nigeria) Limited
AF Alternative Funding
AFS Audited Financial Statements
AGO Automotive Gas Oil
AMNI AMNI International Petroleum Development Company Limited
APDNL Addax Production Development Nigeria Limited
APENL Addax Production and Exploration Nigeria Limited
ATK Aviation Turbine Kerosene
BBL Barrels
BPD Barrels Per Day
BOPD Barrels of Oil Per Day
BO Beneficial Ownership
BSWAP Bonga SouthWest-Aparo
BTU British Thermal Unit
CAC Corporate Affairs Commission
CAMA Companies and Allied Matters Act
CAPEX Capital Expenditure
CBN Central Bank of Nigeria
CDU Crude Distillation Unit
CEs Covered Entities
CGT Capital Gains Tax
CIT Company Income Tax
CNL Chevron Nigeria Limited
COMD Crude Oil Marketing Division (NNPC)
CRU Catalytic Reforming Unit
CTR Carry Tax Relief
DCO Diluted Crude Oil
DPK Dual Purpose Kerosene
DPR Department of Petroleum Resources
DSDP Direct Sale Direct Purchase
E&P Exploration and Production
EDT Education Tax
EEPN(OE)L Esso Exploration and Production Nigeria (Offshore East) Limited
EEPNL Esso Exploration and Production Nigeria Limited
EES Environmental evaluation study
EFCC Economic and Financial Crimes Commission
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Abbreviation and
Acronyms
EGASPIN Environmental Guidelines and Standards for the Petroleum Industry
in Nigeria
EGTL Escravos Gas-to-Liquids
EIA Environmental Impact Assessment
EITI Extractive Industries Transparency Initiative
EPC Engineering, Procurement and Construction
ESC Escravos
FAAC Federation Accounts Allocation Committee
FDPs Field Development Plans
FHN First Hydrocarbon Nigeria Limited
FIRS Federal Inland Revenue Service
FGP Flare Gas Payment
FMFBNP Federal Ministry of Finance, Budget and National Planning
FMOE Federal Ministry of Environment
FOB Free on Board
GBP British pound sterling
GDP Gross Domestic Product
GMD Group Managing Director
GTR Group Treasury
GVC Good and Valuable Consideration
HGO Heavy Gas Oil
HHK Household Kerosene
HHOG Heirs Holdings Oil & Gas Limited
HYPREP Hydrocarbon Pollution Remediation Project
IA Independent Administrator
ICAN Institute of Chartered Accountants of Nigeria
ICT Information and communication technologies
IFRS International Financial Reporting Standards
IOC International Oil Company
IPSAS International Public Sector Accounting Standards
ISA International Standards on Auditing
ISRS International Standards on Related Services
JDA Joint Development Authority
JDZ Joint Development Zone
JOA Joint Operating Agreement
JV Joint Venture
JVCC Joint Venture Cash-call
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Abbreviation and
Acronyms
KRPC Kaduna Refining and Petrochemical Company Limited
LCO Light Cycle Oil
LGO Light Gas Oil
LNG Liquefied Natural Gas
LPFO Low Pour Fuel Oil
LPG Liquefied Petroleum Gas
MBBLS Thousand Barrels
MBTU Thousand British Thermal Unit
MCA Modified Carried Agreement
MCB Main Column Bottoms
MF Marginal Field
million barrels Million Barrels
MMSCF Million Standard Cubic Feet
MOFI Ministry of Finance Incorporated
MOPI Ministry of Petroleum Incorporated
MPNU Mobil Producing Nigeria Unlimited
MT Metric Tons
NAE Nigerian Agip Exploration Limited
NAOC Nigerian Agip Oil Company Limited
NAPIMS National Petroleum Investment Management Service
NASS National Assembly
NBS National Bureau of Statistics
NCDMB Nigerian Content Development and Monitoring Board
NDDC Niger Delta Development Commission
NDPR Niger Delta Petroleum Resources
NEITI Nigeria Extractive Industries Transparency Initiative
NAMS NEITI Audit Management System
NEPL Newcross Exploration and Production Limited
NESREA National Environmental Standards and Regulations Enforcement Agency
NESS Nigerian Export Supervision Scheme
NGL Natural Gas Liquids
NGMC Nigeria Gas Marketing Company Limited
NGR Nigeria Currency
NHU Naphta Hydrotreating Unit
NLNG Nigeria Liquefied Natural Gas
NMDPRA Nigerian Midstream and Downstream Petroleum Regulatory Authority
NNPC Nigerian National Petroleum Corporation
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Abbreviation and
Acronyms
NNPCL Nigerian National Petroleum Company Limited
NOC National Oil Company
NOGABAR Nigerian Oil and Gas Asset Beneficial Ownership Register
NOSDRA National Oil Spill Detection and Response Agency
NPDC Nigerian Petroleum Development Company
NPSC Nigerian Pipelines and Storage Company Ltd
NSIA Nigerian Sovereign Investment Authority
NSTPJDA Nigeria-Sao Tome and Principe Joint Development Authority
NSWG National Stakeholders Working Group
NUIMS NNPC Upstream Investment Management Services
NUPRC Nigerian Upstream Petroleum Regulatory Commision
OML Oil Mining Lease
OPA Off-shore Processing Arrangements
OPCOM Operating Committees
OPEC Organisation of the Petroleum Exporting Countries
OPEX Operating Expense
OPL Oil Prospecting License
OSP Official Selling Price
PAYE Pay as You Earn
PDA Propane De-Asphalt
PHRC Port Harcourt Refining Company
PIA Petroleum Industry Act, 2021
PLATFORM Platform Petroleum Limited
PMC/OE Project Management Consultant/Owner’s Engineer
PML Petroleum Mining License
PMS Premium Motor Spirit
PPMC Petroleum Products Marketing Company
PPPRA Petroleum Products Pricing Regulatory Agency
PPL Petroleum Prospecting License
PPT Petroleum Profits Tax
PXF Pre-Export Finance
PSC Production Sharing Contract
QIT Qua Iboe Terminal
RA Repayment Agreement
RPC Refinery Project Coordinator
SBUs Strategic Business Units
SC Service Contract
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Abbreviation and
Acronyms
SEEPCO Sterling Oil Exploration and Energy Production Company Limited
SEPLAT Seplat Petroleum Development Company Limited
SG Specific Gravity
SGORL Sterling Global Oil Resources Limited
SNEPCO Shell Nigeria Exploration and Production Company Limited
SOE State Owned Enterprise
SR Sole Risks
SPDC Shell Petroleum Development Company
STAR DEEP Star Deepwater Petroleum Limited
TECOM Technical Committee
TEPNG TotalEnergies EP Nigeria Limited
TNOS Texaco Nigeria Outer Shelf
TOR Terms of Reference
TPF Third Party Financing
TMP Trial Marketing Period
TUPNI TotalEnergies Upstream Nigeria Limited
USD United States Dollar
US$ United States Dollar
VAT Value Added Tax
VDU Vacuum Distillation Unit
VGO Vacuum Gas Oil
WAEP West Africa Exploration & Production Company Limited
WHT Withholding Tax
WRPC Warri Refining and Petrochemical Company Limited
WWT Waste Water Treatment
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STATEMENT BY
THE EXECUTIVE SECRETARY/CEO & NATIONAL COORDINATOR,
NIGERIA EITI.
Planning without facts has resulted in retrogression and counterproductive consequences

for developing countries, including Nigeria. This is in terms of poor utilisation and loss of
revenues, misplacement of priorities and national development issues. The Nigeria Extractive
Industries Transparency Initiative -NEITI industry reports over the years have sought to close
these gaps, providing empirical information and data to aid national development, planning,
implementation, impact and poverty reduction. NEITI has also ensured that these reports are
readily available and widely disseminated to the Government and Extractive Industries with
specific attention on the media, the legislature and civil society whose duty it is, to use these
reports to hold Government and Companies accountable.
The responsibility of NEITI is to use these reports to breach the yearning gap, draw national
and international attention to the importance of data in national planning, support the fight
against corruption and in the search for impact, ensure that revenue from oil, gas and solid
minerals and the extractive industries in general support national development and reduce
poverty.
With the release of the 2021 oil and gas report themed, “Impact built on blocking leakages to
grow revenue”, NEITI has conducted a total of fourteen cycles of reconciliatory reports in the
oil and gas sector. The 2021 Report has nine sections and was produced within the context of
the Petroleum Act, 1969 (as amended) which was the primary oil and gas legislation in use in
2021. With the enactment of the Petroleum Industry Act in August 2021, the Petroleum Act
was repealed along with some other legislation. However, some references are made in this
report to the PIA.
2021 brought about major institutional reforms in the Oil and Gas industry, following the
introduction of the Petroleum Industry Act (2021). The act introduced legal, governance,
regulatory and fiscal reforms and addressed legitimate concerns of host communities.
The PIA also brought about changes to the Fiscal regime of the sector with the introduction of
new benefit streams and changes to the revenue flows to the Federation.
The key objectives of the NEITI 2021 oil and gas report are to:
• Report the quantities of crude oil and gas produced, utilized, and/or exported.
• Revenue flows between the covered entities, identifying any investments made by the
Federation or the Federal Government in the oil and gas industry within the period.
• Balances payable/receivable at the end of the audit period for all revenue streams.
• Reconcile the physical/financial transactions reported by payers and recipients as
appropriate.
• Review and track the processes that underpinned the transactions, identify leakages and
lapses in the value chain.
• Report on emerging issues such as beneficial ownership, contract transparency, etc.
• Make observations and recommendations that will aid policy-making.
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STATEMENT BY
THE EXECUTIVE SECRETARY/CEO
& NATIONAL COORDINATOR,
NIGERIA EITI.
A total of 69 companies and the Nigeria Liquified Natural Gas, NLNG were covered in the
report, while twelve government agencies and one (1) State Owned Enterprise (SOE)-NNPC
Ltd were also reported. 23 revenue streams were covered in the report. 13 of them are
specifically required by the EITI, while ten are mandated by the NEITI Act 2007. The NEITI
report also provided visual imagery of the flow of oil and gas revenue into the federation
account pre and post-passage of the PIA. It also contained the various production
arrangements in the Nigeria oil and gas sector as well as total production volumes for the
period under review.
I am excited to announce that NEITI deployed its NEITI Audit Management System -NAMS as
well as the traditional templates for data collection for the NEITI 2021 industry reports. All
data were later disaggregated by individual projects, companies and revenue streams.
One major area we promised to give our stakeholders an update on is the financial liabilities
of entities to the federation. The 2021 industry report revealed a total outstanding taxes
payable to the government to stand at US$ 8.265 billion in Federation revenue. The non-
payment of these funds as at when due is a constraint on revenue flow to the Federation.
Others include the status of the NLNG dividends, transportation revenue, cash call budgeting
and expenditure procedures, quasi-fiscal expenditures, gas production sales and utilisation
as well as subsidy payments.
In all 29 recommendations were made which when implemented, would improve the
industry systems and operations.
As I present this report, I hope that the ultimate aim of the EITI which is to improve systems,
support national development and reduce poverty would have been achieved.
Orji Ogbonnaya Orji, PhD

Executive Secretary/CEO & National Coordinator, Nigeria EITI.
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EXECUTIVE
Summary
CONTENT
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EXECUTIVE
Summary
1. Background
Nigeria Extractive Industries Transparency Initiative (NEITI) engaged the services of Messrs
Taju Audu & Co. as the Independent Administrator (IA) for the NEITI Oil & Gas Industry
Report – 2021 themed “Relevance built on revenue growth and impact: improving revenue
generation.” This report is prepared in line with the Extractive Industries Transparency
Initiative (EITI) Standard 2019 and the Nigeria Extractive Industries Transparency Initiative
(NEITI) Act, 2007. It consists of nine Sections, listed below:
◦ Executive Summary
◦ Introduction
◦ The Oil and Gas Sector in Nigeria
◦ Exploration, Production and Export
◦ Revenue Collection and Reconciliations
◦ Cash Calls
◦ Downstream Operations
◦ Infrastructure Provisions, Barter Arrangement, Social and Economic Spending
◦ Outcomes and Impact
This report should be read along with the appendices, contextual information on NEITI
website and within the context of the Petroleum Act, 1969 (as amended) which was the
primary oil and gas legislation when the activities that generated the revenue took place.
However, with the enactment of the Petroleum Industry Act (PIA) in August 2021, the report
should also be read in the context of the various legislations as stated in the relevant Sections.
2. Objectives
The key objectives of the audit include the following:

• To review and provide an overview of processes within the sector.
• To conduct an independent assessment of financial transactions (receipts and payments)
and make recommendations to further improve transparency and accountability within
the sector.
3. Scope and Materiality
A total of 13 revenue streams with a minimum contribution of 1.5% of total revenue were
found to be material for reconciliation at scoping (See Appendix 1 for scoping study report).
However, ten other revenue streams were included in the scope of the report and reconciled
on the basis of Section 3(f) of the NEITI Act. Consequently, all revenue streams except NESS
Fees, PAYE and Miscellaneous Income were reconciled by the IA.
A total of 69 companies and the Nigeria Liquefied Natural Gas (NLNG) were covered in this
report. Twenty-two out of 69 companies fell within the criteria for reconciliation and their
payments represented 95.65% of total payment by companies. Thirteen government entities
and one State-owned enterprise (SOE) were also covered.
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4. Key Highlights of the 2021 Oil and Gas Audit Report

Table 1: Key Highlights of the 2021 Oil and Gas Audit Report
Country Nigeria
Fiscal Period Covered 2021
Sector Covered Oil and Gas
Type of Audit Financial, Physical and Process
2021 Audit Theme “Relevance built on revenue growth and impact: improving revenue generation.”
Independent Administrator Taju Audu & Co. (Chartered Accountants)
Total number of companies - 69

Entities Covered Companies Within the Materiality Threshold – 22
•Section 1.4 Government Entities (including SOE)- 13
Other entities - 2
Revenues covered Number of revenue streams - 23
•Section 1.4 Revenue streams reconciled - 20
Revenue streams unilaterally disclosed - 3
Revenue payments Sale of crude oil and gas (less NNPC in-kind) US$8.098billion (35.14%)
•Section 4.5 Taxes and other specific flows US$13.939billion(60.48%)
Payment to sub-national entities US$1.009billion (4.38%)
Total Revenue US$23.046billion (100%)
Reconciliation position Reconciled Revenue US$21,648,054,000 (93.94%)
•Section 4.4 Unreconciled Revenue US$7,808,000 (0.03%)
Unilaterally disclosed Revenue US$1,390,226,000 (6.03%)
Total Revenue US$23,046,088,000 (100%)
Analysis and distribution Analysis of Total Revenue
of total revenue Unremitted revenue by SOE US$1,951,115,000 (8.47%)
(value and proportion)
Quasi-fiscal expenditure by SOE US$6,931,285,000 (30.08%)
•Section 4.7 Sub-national payments US$963,629,000 (4.18%)
Transfers to the Federation US$13,200,059,000 (57.27%)
Total revenue US$23,046,088,000 (100%)
Federation Revenue Distribution
9 Oil producing States 13.00%
Federal Government 52.68%
States 26.72%
Contribution of Oil and Local Governments 20.60%
Gas to the Economy
•Section 7.4 Country GDP US$434.17billion
Contribution of Oil and Gas to GDP 7.24%
Country total exports US$36.55billion
Contribution to exports 76.22%
Total number of employees declared 19,171
Fiscalised Crude oil Joint Ventures ( Jvs)- including MCA & RA 225,230.00mbbls (39.78%)
production by arrangements Production Sharing Contracts (PSCs) 242,956.55mbbls (42.92%)
(volumes and proportions)
Service Contracts (SCs) 978.89mbbls (0.17%)
•Section 3.2.1 Sole Risks (SRs) 80,293.90mbbls (14.18%)
Marginal Fields (Mfs) 16,670.61mbbls (2.94%)
Total fiscalised crude oil production 566,129.94mbbls
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Summary
4. Key Highlights of the 2021 Oil and Gas Audit Report

Table 1: Key Highlights of the 2021 Oil and Gas Audit Report
Country Nigeria
Gas production Joint Ventures ( JVs) 1,490,096.85mmscf (54.31%)
(volumes and proportion) Production Sharing Contracts (PSCs) 609,589.49mmscf (22.21%)
•Section 3.2.2 Service Contracts (SCs) -
Sole Risks (SRs) 561,288.67mmscf (20.46%)
Marginal Fields (MFs) 82,725.31mmscf (3.02%)
Total Gas production 2,743,700.32mmscf
Summary of issues/ 1.Crude oil losses due to theft, sabotage and measurement errors
findings from the Audit 2.PMS subsidy and other quasi-fiscal expenditures
•Section 8. 3.Unremited/under-remitted federation revenues by the SOE and companies
covered in the 2021 audit
4.NPDC related issues of cash call funding and asset takeover
5.Misapplication of 13% derivation principle
6.Issues related the PIA and sector governance
7.Issues related to crude oil and gas barter arrangements
8.NEITI Audit remediation issue
Exchange rate for ₦399.68 CBN official average exchange rate for 2021
the Audit
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CONTENT
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CHAPTER
ONE
CHAPTER 1 - INTRODUCTION
1.1. Background - NEITI
NEITI was set up to facilitate and promote prudent management of revenues from Nigeria’s
abundant natural resources, ensuring that there is transparency and accountability in the use
of these resources to reduce poverty and ensure sustainable development. A brief history of
NEITI can be found here1.
1.1.1. The NEITI 2021 Oil & Gas Report
As stipulated by the NEITI Act 2007, NEITI engaged the services of an Independent
Administrator (IA) to conduct the annual audit of Nigeria’s oil and gas sector. This involves
the reconciliation of payments made by companies with receipts of extractive revenues by
government entities. The NSWG decided on a theme for the 2021 report; “Impact built on
blocking leakages to grow revenue”. The NEITI 2021 Oil and Gas Report was prepared in line
with the provisions of the EITI 2019 Standard and the NEITI Act, 2007.
1.2. Objective
The key objectives of the work done by the IA and laid out in this report are in accordance
with the TOR and summarized below:
◦ To report on the quantities of crude oil and gas produced, utilized, and/or exported.
◦ To report on the revenue flows between the covered entities, identifying any
investments made by the Federation or the Federal Government in the oil and gas
industry within the period.
◦ To report on balances payable/receivable at the end of the audit period for all revenue
streams covered by the report.
◦ To reconcile the physical/financial transactions reported by payers and recipients as
appropriate.
◦ To review and track the processes that underpinned the transactions, identify leakages
and lapses in the value chain.
◦ To report on emerging issues such as beneficial ownership, contract transparency, etc.
◦ To make observations and recommendations that will aid policy-making.
1.3. Basis and Period of Reporting
Basis of Reporting
The IA exercised professional judgement and applied appropriate international professional
standards to develop procedures, including audit planning and obtaining of audit evidence.
1
A brief history of NEITI - https://neiti.gov.ng/about/brief-history-of-neiti
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This provides a sufficient basis for a comprehensive and reliable EITI Report. The Standards
and Audit Regulations that were considered include but not limited to:
• ISA 530 –Audit Sampling

• ISA 500 – Audit Evidence
• ISRS 4400 –Engagement to Perform Agreed Upon Procedures
• ISRS 4410 – Relative to compilation engagement
Period of Reporting
All receipts and payments are on cash basis and relate to the period 1st January 2021 to 31st
December, 2021. Crude oil and gas sales receivables as at 31st December, 2021 were also
reported.
This report should be read along with the appendices, contextual information on NEITI
website and within the context of the Petroleum Act, 1969 (as amended) which was the
primary oil and gas legislation when the activities that generated the revenue took place.
However, with the enactment of the Petroleum Industry Act in August 2021, the Petroleum
Act was repealed along with some other legislations and as such some references are made to
the PIA in this report.
Currency of Reporting
The Reporting Currency is US Dollars (US$). Except otherwise stated in other Sections of this
report, for payments made in Naira, the average exchange rate from the Central Bank of
Nigeria (CBN) 2 was used for conversion to US Dollars. The NNPCL used FAAC’s monthly
average rate of conversion for all revenues it collected.
Table 2 - Average Exchange Rate by CBN

Year (US$) Dollars US$/Naira (N) US$/Euro (E) US$/British Pound (£)
2021 1 399.6813 0.8469 0.7279
Source: CBN
Table 3 - NNPC/FAAC Monthly Exchange Rates for 2021

Month (US$) Dollars Naira N to US $
January 1 379.00
February 1 382.54
March 1 378.88
April 1 382.54
May 1 383.47
June 1 382.80
July 1 384.27
August 1 384.27
September 1 384.35
October 1 387.01
November 1 386.30
December 1 388.68
Source: FAAC Monthly Reports
2
Exchange rate from CBN - https://www.cbn.gov.ng/rates/ExchangeArchives.asp
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1.4. Scope of Work
The scope of work spanned six phases, as illustrated in Figure 1 below. It is also in line with
the EITI Requirements and the Terms of Reference (See Appendix 2). The IA conducted some
scoping work which provided information that the NSWG utilized in its determination of the
scope of information published in this EITI report. The scoping report is attached as
Appendix 1.
Figure 1 – The Audit Phases and Deliverables
0. 1. 2. 3. 4. 5.
Scoping Preliminary Data Initial Investigation of Final
Analysis Analysis Collection Reconciliation Discrepancies Report
Scoping Inception Initial Independent Independent

Study Report Reconciliation Administrator’s Administrator’s
Report Draft Report Final Report
1.4.1. Materiality for the Report
The EITI Standard defined Materiality as follows: “Payments and revenues are considered
material if their omission or misstatement could significantly affect the comprehensiveness
of the disclosures”. Material Companies and Revenue Streams (i.e., payments and revenues
are highlighted below. However, the audit reported beyond what is material as required by
the NEITI Act 2007.
Revenue Streams
In arriving at the materiality decision for the revenue streams, each revenue stream was taken
as a percentage of the total revenue. Based on the scoping work carried out by the IA, it was
determined and agreed that 13 revenue streams with a minimum contribution of 1.5% to the
total revenue was material for reconciliation. Based on this (1.5%) threshold, 96.53% of the
total revenue was to be reconciled. Refer to the scoping report for the details of the material
revenue streams.
In addition to the above, ten more revenue streams were included in the scope of coverage on
the basis of Section 3(f) of NEITI Act, which focuses on all revenue payments. This Section
mandates NEITI to “monitor and ensure that ALL payments due to the Federal Government
from all extractive industry companies, including taxes, royalties, dividends, bonuses,
penalties, levies and such like, are duly made”. Based on this, the scoping study recommended
that, to every extent possible, “all revenue streams except NESS Fees, PAYE and
Miscellaneous Income shall be reconciled by the IA”. It was further decided that all
discrepancies should be investigated to a margin of 0.05% of the aggregate revenue stream.
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Given the above, 23 revenue streams were covered in this report and 20 of these were
reconciled. See Table 4 below for the description of the revenue streams.
Table 4 - A Description of Revenue Streams

S/N Revenue Stream Description of Revenue Collecting
Reconciled Revenue Streams Government Entity
1 Royalty (Oil) A percentage share of production i.e. the value derived from oil
production, paid from a producing well.
2 Royalty (Gas) A percentage share of production i.e. the value derived from gas
production, paid from a producing well.
3 Signature Bonus/ Signature Bonus is a onetime fee for the assignment and
Licence fees securing of a licence. It is paid, irrespective of economic success
of the well, by the contractor or licensee while the periodic Nigerian Upstream
renewals for the licence is termed licence fees. Petroleum Regulatory
Commission (NUPRC)
4 Flared Gas Payment Gas flare payments apply to any natural gas that is flared and/
or vented at production facilities of the producers.
5 Concession Rentals These are receipts of revenue from the grant extended by the
Federation to permit companies to explore for and produce oil,
gas or mineral resources within a strictly defined geographic
area.
6 Petroleum Profits Tax PPT is tax imposed on income of companies in petroleum

(PPT) operations. Read more about PPT here 3.
7 Companies Income Tax CIT tax is a tax imposed on the profit of oil and gas companies
(CIT) whose income is from oil and gas production. Read more about
CIT here 4.
8 Capital Gains Tax (CGT) CGT is a tax levied on profit from the sale of property/assets or
an investment. Read more about CGT here 5.
Federal Inland Revenue
Tertiary Education Tax EDT is a tax chargeable on all companies registered in Nigeria, Service (FIRS)
9
(EDT) who are expected to pay a given percentage of their chargeable
profits as contribution to the Education Tax Fund which is used
for the rehabilitation, restoration and consolidation of Tertiary
Education in Nigeria. Read more here 6.
10 Withholding Tax Withholding Tax is income tax paid in advance. Find out more
here 7.
11 Value Added Tax (VAT) VAT is a consumption tax paid when goods are purchased and/
or services rendered. Read more here8.
12 NDDC 3% Levy It is a mandatory social contribution levied on companies Niger Delta Development
operating in the oil and gas sector. Read more about NDDC here 9. Commission (NDDC)
13 NCDMB 1% Levy This is a levy imposed on all contracts in the upstream sector, to Nigerian Content
develop Nigerian Content in the Nigerian Oil and Gas Industry. Development and
Read more here10. Monitoring Board
(NCDMB)
3
Information on Petroleum Profits Tax - https://www.firs.gov.ng/petroleum-profits-tax-ppt/
4
Information about Company Income Tax - https://firs.gov.ng/wp-content/uploads/2021/07/Company-Income-Tax-Act.pdf
5
Information on Capital Gains Tax - https://www.firs.gov.ng/capital-gains-tax-cgt/
6
Information on Tertiary Education Tax - https://www.firs.gov.ng/tertiary-education-tax-edt/
7
Information on Withholding Tax - https://www.firs.gov.ng/withholding-tax-wht/
8
Information on Value Added Tax - https://www.firs.gov.ng/value-added-tax-vat/
9
Information on NDDC - https://www.nddc.gov.ng/mission.aspx
10
Information on NCDMB - https://ncdmb.gov.ng/ncdf-frequently-asked-questions/
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Table 4 - A Description of Revenue Streams (cont’d)

S/N Revenue Stream Description of Revenue Collecting
Government Entity
14 Dividend from NLNG This is NNPC’s profits from its investment in Nigeria NLG
Limited (NLNG).
15 Transportation Fees/ This is revenue received by the NNPC in relation to

Pipeline/ Haulage Fees transportation of oil and gas products.
16 Proceeds from Sale of These are revenues from the international sales of the
Federation Export Crude Federation crude oil equity entitlement from JV operations.
Oil Crude oil and gas are normally allocated to the Federation from
Joint Venture operations through the NNPC in accordance with
the Federation’s equity share or participatory interests in each
of the Joint Venture operations.
Nigerian National
17 Proceeds from Sale of These are revenues from the local sales of Federation crude oil Petroleum Corporation
Domestic Crude Oil equity entitlement from the different production arrangements. (NNPC)
Crude oil is allocated from Federation equity crude from
different production arrangements to NNPC for refining into
petroleum products for local market or consumption.
18 Proceeds from Sale of These are receipts of revenue from the sale of the Federation’s
Profit Oil share of crude oil entitlement from PSC operations.
19 Proceeds from Sale of These are revenues from the sale of the Federation Gas equity
Federation Equity Gas entitlement from JV operations.
20 Proceeds from Sale of These are revenues from the sale of the Federation Feedstock
Feedstock equity entitlement from JV operations.
Unilaterally Disclosed by Companies

21 Pay As You Earn (PAYE) PAYE is a tax imposed on individuals who are either in Federal Inland Revenue
employment
4
or running their own small businesses. Information Service (FIRS)
on PAYE can be found here11.
Unilaterally Disclosed by Government
22 Nigerian Export This is an administrative charge required to be paid by exporters Federal Ministry of
Supervision Scheme of crude oil for the administration of the Pre-Shipment Finance, Budget &
(NESS) Fee Inspection of Exports Scheme. The essence of Pre-Shipment National Planning
Inspection is to ascertain the quantity, quality and price
comparison of oil by virtue of section 2 of the Pre-shipment
Inspection Act. The act can be found here12.
23 Miscellaneous Income This includes bank interest receipts, insurance claims and other Nigerian National
share of revenue from the oil and gas sector. Petroleum Corporation
(NNPC)
11
Information on PAYE - https://lirs.gov.ng/tax-information/tax-types
12
Pre-Shipment Inspection of Exports Act
Total Revenue from the Oil and Gas Sector in 2021
This report shows that the total receipts from the 23 revenue streams was
US$23,046,088,000 in 2021. Table 5 below shows what portion of total receipts were
reconciled and what portion was unilaterally disclosed. See Chapter 4 of this report for
details of revenue collection from the sector.
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Table 5 - Summary of Reconciliation Position

S/N Reconciliation Position Amount (US$) % of Total Revenue
1 Reconciled Revenue 21,648,054,000 93.94
2 Unreconciled Revenue 7,808,000 0.03
3 Unilaterally Disclosed Revenue 1,390,226,000 6.03
4 Total Revenue 23,046,088,000 100
Companies
Sixty-nine companies that made payments for concession rentals, licenses, signature
bonuses, royalty, and/or oil and gas taxes in 2021 were covered in this report. This is
inclusive of four additional companies that were discovered after the completion of scoping
work. The material companies were identified for reconciliation from the data received from
the companies (before initial reconciliation). Each company's total payments was computed
as a percentage of total payments by all 69 companies, and 22 of the companies, with
payments of over US$50m, which constituted 95.65% of all company's payments were
material for reconciliation. See Table 6 below for a list of companies and their respective
contributions to the total Companies’ payments. Those in the highlighted box were the
material companies.
Table 6 - Companies Covered in the Report

PAYMENTS BY % CONTRIBUTION TO
S/N ENTITIES COMPANIES TOTAL PAYMENT
1 SHELL NIG. EXP. & PROD.CO LTD (SNEPCO) 1,460,056.00 12.32278

2 EQUINOR NIGERIA ENERGY COMPANY LIMITED 1,155,453.00 9.75195
3 SHELL PETROLEUM DEVELOPMENT COMPANY 1,063,175.00 8.97313
4 MOBIL PRODUCING NIG UNLIMITED 1,044,536.00 8.81582
5 TOTAL ENERGIES UPSTREAM NIGERIA LIMITED 986,484.00 8.32586
6 STAR DEEP WATER PETROLEUM LIMITED 932,798.00 7.87276
7 CHEVRON NIGERIA LTD 739,736.00 6.24333
8 TOTAL ENERGIES EP NIGERIA LIMITED 675,312.00 5.69959
9 ESSO E&P NIGERIA LTD 629,234.00 5.31070
10 NIGERIA PETROLEUM DEVELOPMENT COMPANY LIMITED 617,313.00 5.21008
11 STERLING OIL EXPLORATION & ENERGY PRODUCTION CO. LTD 613,434.00 5.17734
12 NIGERIA AGIP OIL CO LTD 227,965.00 1.92401
13 ESSO E&P (OFFSHORE EAST) NIGERIA LTD 211,887.00 1.78831
14 ADDAX PETROLEUM DEVELOPMENT NIGERIA LIMITED 195,890.00 1.65330
15 SEPLAT PETROLEUM DEVELOPMENT COMPANY 177,589.00 1.49884
16 NECONDE ENERGY LIMITED 133,763.00 1.12895
17 FIRST EXPLORATION & PRODUCTION LIMITED 105,700.00 0.89210
18 CONTINENTAL OIL AND GAS COMPANY 92,259.00 0.77866
19 ND WESTERN LIMITED 89,209.00 0.75292
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20 NIGERIA AGIP EXOLORATION(NAE) 66,515.00 0.56138

21 CONOIL PRODUCING LTD 63,511.00 0.53603
22 EROTON E&P COMPANY LIMITED 50,974.00 0.43022
23 OANDO OIL LIMITED 43,966.00 0.37107
24 STERLING GLOBAL OIL RESOURCES LIMITED 41,784.00 0.35265
25 NEWCROSS E&P LIMiTED 40,976.00 0.34583
26 AMNI INTERNATIONAL PETROLEUM LTD 39,470.00 0.33312
27 ORIENTAL ENERGY RESOURCES LTD 39,057.00 0.32964
28 SHORELINE NATURAL RESOURCES LTD 32,714.00 0.27610
29 AITEO EASTERN E&P CO. LTD 30,087.00 0.25393
30 MIDWESTERN OIL AND GAS 29,485.00 0.24885
31 ELCREST EXPLORATION & PRODUCTION NIGERIA LIMITED 25,338.00 0.21385
32 FIRST HYDROCARBON NIGERIA 21,071.00 0.17784
33 HEIRS HOLDINGS OIL & GAS LIMITED 19,939.00 0.16828
34 CHINA NATIONAL OFFSHORE OIL CORPORATION LTD 17,442.00 0.14721
35 BELEMA OIL PRODUCING LTD 16,363.00 0.13810
36 NIGER DELTA PETROLEUM RESOURCES LTD 15,387.00 0.12987
37 ENERGIA LIMITED 13,229.00 0.11165
38 MONI PULO LTD 9,428.00 0.07957
39 PILLAR OIL LIMITED 66,515.00 8,555.00

40 PLATFORM PETROLEUM LIMITED 63,511.00 8,334.00
41 YINKA FOLAWIYO PETROLEUM 50,974.00 7,801.00
42 LEKOIL LIMITED 43,966.00 7,756.00
43 PANOCEAN OIL NIGERIA LIMITED 41,784.00 6,124.00
44 WALTERSMITH PETROMAN 40,976.00 6,116.00
45 FRONTIER OIL LIMITED 39,470.00 5,061.00
46 GREEN ENERGY INTERNATIONAL LIMITED 39,057.00 4,410.00
47 ADDAX PETROLEUM EXPLORATION NIGERIA LIMITED 32,714.00 3,476.00
48 UNIVERSAL ENERGY LIMITED 30,087.00 2,526.00
49 BRITTANIA U-NIGERIA 29,485.00 2,408.00
50 CHORUS ENERGY LTD 25,338.00 2,374.00
51 ENAGEED RESOURCES LTD 21,071.00 2,009.00
52 SOUTH ATLANTIC PET. LTD 19,939.00 1,909.00
53 FAMFA OIL LIMITED 17,442.00 1,748.00
59 NEWCROSS PETROLEUM LIMITED 16,363.00 1,672.00
54 NETWORK EXPLORATION & PRODUCTION LTD 15,387.00 1,456.00
55 EXCEL EXPLORATION & PRODUCTION LIMITED 13,229.00 1,407.00
56 AGIP ENERGY AND NATURAL RESOURCES (AENR) 9,428.00 1,377.00
57 PRIME 130 1,049.00
58 ALL GRACE ENERGY LIMITED 886.00
60 TEXACO NIGERIA OUTER SHELF LIMITED 428.00
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61 PRIME 127 207.00 0.00175

62 SUMMIT OIL INTERNATIONAL LIMITED 189.00 0.00160
63 NEXEN PETROLEUM NIGERIA LIMITED (Subsidiary of CNOOC) 177.00 0.00149
64 DUBRI OIL COMPANY LIMITED 116.00 0.00098
65 MILLENIUM OIL & GAS LIMITED 96.00 0.00081
66 STERLING GLOBAL EXPLORATION AND PRODUCTION LIMITED 80.00 0.00068
67 STERLING EXPLORATION LIMITED 74.00 0.00062
68 STERLING INTERNATIONAL RESOURCES LIMITED 58.00 0.00049
69 SUNTRUST OIL COMPANY NIGERIA LIMITED 21.00 0.00018
11,848,429.00 100.00000
Out of the 69 companies selected, Lekoil Limited did not submit any information to the IA for
reconciliation but made payments. The total payments by Lekoil amounted to US$7,756,000,
representing 0.03365% of the total revenue and thus considered non-material to this report.
1.4.2. Government Entities
It was identified at scoping that a total of 12 Government Entities and one State-owned
Enterprise (SOE) should be covered in the audit. Of this number, five are agencies that
received revenue (See Table 7).
Table 7- Government Entities Covered by the report

S/N State Owned Enterprise (SOE)
Nigerian National Petroleum Company Limited (NNPCL)
Receiving Government Entities
1 Federal Inland Revenue Service (FIRS)

2 Nigerian Upsream Pretroleum Regulatory Commission (NUPRC)
3 Niger Delta Development Commission (NDDC)
4 Federal Ministry of Finance, Budget, and National Planning
5 Nigerian Content Development and Monitoring Board (NCDMB)
Other Government Entities
6 Central Bank of Nigeria (CBN)
7 Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)
8 Office of the Accountant General of the Federation
9 Federal Ministry of Environment
10 National Oil Spill Detection and Response Agency
11 Hydrocarbon Pollution Remediation Project
12 National Environmental Standards and Regulations Enforcement Agency
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1.4.3. Other Entities
Other Entities covered by this report are:

▪ Nigeria Sao Tome Joint Development Authority
▪ Nigeria Liquefied Natural Gas (NLNG) Limited
1.5. Work Approach

1.5.1. Nature and Extent of Work Done
The primary tasks of the Independent Administrator were to;

◦ Carry out preliminary procedures for the assignment as stated in the TOR
◦ Collect primary data from covered entities and gather publicly available information
for the report, in accordance with the agreed scope of work
◦ Compile and organize/manage the collected data, carry out reconciliation, and
identify gaps and discrepancies (if any) between payments and receipts
◦ Investigate and resolve the discrepancies based on the guidelines provided by the
NSWG
◦ Prepare a report that mirrors: the contextual information, reconciled payments and
receipts, and differences
◦ Prepare a report that incorporates audit findings and recommendations as well as the
comments and views of the NSWG on the above.
1.5.2. Data Collection
Data was collected from covered entities through the NEITI Audit Management System
(NAMS) and the traditional templates. Entities populated data for some specified revenue
streams, such as taxes, NDDC payment, NCDMB payment and revenues from the SOE on the
NAMS platform as a trial run of the new platform while the other information were collected
through the traditional data collection templates. The Covered Entities were also required to
submit Audited Financial Statements and other supporting documents along with the
populated templates. These formed the primary source of information/data used for the
reconciliations.
1.5.3. Level of Disaggregation
In this report all data were disaggregated by individual projects, companies and/or revenue
streams.
The word “project” in this context as “operational activity(ies) that is (are) governed by a
single license, contract agreement and/or any other similar legal document and form the
basis for payment of liabilities with the government. These activities can be governed by an
Oil Prospecting License (OPL) or Oil Mining License (OML). Where activities relating to one
or more OPLs and/or OMLs are substantially interconnected and are governed by a single
joint operating agreement, production sharing contract, service contract or other similar
agreement, they may be treated as a single project”.
Accordingly, all production and revenue data were disaggregated in line with the above and
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detail can be found in Appendix 8, 13 and 23.
1.5.4. Reconciliation and Investigation of Discrepancies
Data reconciliation exercise was undertaken by the IA with the Covered Entities to resolve
variances identified between data submitted by Companies and data submitted by
Government Entities. All discrepancies were identified prior to the reconciliation phase and
were shared with relevant parties.
Initial Reconciliation Procedures: The payments reported by the extractive companies were
compiled, validated with source documents and compared with the receipts reported by the
Government Agencies. All discrepancies identified thereon were listed according to the
Government Agency and company involved.
Final Reconciliation Procedures: In cases where the reported revenue data from Government
Agencies tallied with the payment data reported by companies, or with little variation that is
within the tolerable reconciliation discrepancies of 0.05% of the aggregate revenue stream
as contained in the TOR, the IA concluded that the discrepancies were not material to the
report. That means, they have not impacted the report or audit outcome.
However, in cases where the reported revenue data from Government Agencies did not agree
with the companies’ reported payment data, and the variation was not within the tolerable
reconciliation discrepancies, the discrepancies were identified and subjected to further
investigations, and necessary adjustments were made thereafter before completing the final
reconciliation report.
The above procedure also applied to Production and export data.
1.6. Data Quality & Assurance
The data quality procedures relied upon by the Independent Administrator were drawn from
applicable legal and institutional framework for quality and assurance in Nigeria as set out in
the scoping study.
The following procedures were adopted in the course of the audit:
1. Review of templates submitted directly by the Covered Entities to establish the

completeness and relevance of data provided: The IA reviewed the Data Templates
submitted by 22 material Companies and the data submitted by the government entities.
The IA ensured that the templates provided all the necessary information and data
required for the Audit and where such information/data were not provided, the IA
requested them from the covered entities.
Relevance and completeness checks of each data provided by the companies were also
carried out by creating a check-list of information to be submitted by the covered
entities. This check-list was used throughout the Audit to verify the completeness and
relevance of Data submitted by covered entities.
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2. Obtain source documents and data templates and conduct 100% vouching of
transactions with underlying records to ensure integrity, accuracy and relevance of data:
The IA received supporting documents from the 22 material Companies. The IA ensured
that the source documents obtained were accurately matched with the information
submitted in the Data Templates and obtained further clarification where necessary.
3. Reconciliation of Companies’ records with records of NUPRC, FIRS and other

Government Agencies to ensure that payments are consistent with receipts: The IA carried
out reconciliation exercise with the covered entities to match payments by companies with
Government receipts. Reconciliation was done for all payments made by material
Companies. The result of the reconciliation can be found here.
4. Obtain the 2021 Audited Financial Statement or an attestation from companies,

signed by a senior official of the entity, who is a member of a recognised professional
accounting body, confirming that transaction figures and source documents provided to
the IA are complete, correct and adhere to requirements of IFRS/IPSAS, as applicable:
Upon conclusion of the reconciliation, Companies were requested to sign the reconciled
company position and also attest to the completeness and correctness of the Data
provided. The IA further requested attestation from a senior member of the company who
is a member of a recognised professional accounting body, to confirm that the data
provided conforms to data used in the audited account/management account and in
compliance with the requirement of IFRS/IPSAS. Companies that had provided Audited
Financial Statements were not required to sign the attestation.
Of the 22 material companies, 20 either signed the attestation confirming that their internal
accounting procedures was in compliance with the International Financial Reporting
Standards (IFRS) or submitted Audited Financial statements to the IA.
Assessment of the Data Assurance Procedures

The IA used the above mechanisms to conduct the Data Assurance analysis on all information
and source documents obtained from the material entities; and the level of assurance for each
procedure was graded as follows:
Data Quality Procedure Result % Assesment
Review all templates submitted directly by the All the 22 material Companies submitted data 100% High
Covered Entities to the IA to establish the templates and check-lists. The IA reviewed all of
completeness and relevance of data provided. the templates and check-lists submitted.
Obtain source documents and data templates and All the 22 material Companies provided 100% High
conduct 100% vouching of transactions with supporting documents requested.
underlying records to ensure integrity, accuracy
and relevance of Data.
Reconciliation of Companies’ records with records All the Companies’ payments were reconciled 100% High
of NUPRC, FIRS and other Government Agencies with government’s records. Details of the result
to ensure that payments are consistent with can be found here.
receipts
Obtain AFS or an attestation from organizations, 20 companies provided either attestation or 91% High
signed by a senior official of the entity, who is a Audited Financial Statement.
member of ICAN or ACCA, confirming that
transactions figures and source documents
provided to the Independent Auditors are
complete, correct and adhere to requirements of
IFRS/IPSA, as applicable
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Grading of the Level of Assurance

High: Assessment level above 79%
Medium: Assessment level between 50% and 79%
Low: Assessment level below 50%
The above result of the assessment above provides a reasonable assurance that the audit
conforms with the data quality procedure set by the IA.
1.7. Findings, Observations and Recommendations

Observations and Findings
The audit observed that out of the 69 companies covered by the report, Lekoil Ltd. failed to
submit the requested information and data for reconciliation. The total payments by Lekoil
amounted to US$7,756,000, representing 0.03365% of the total revenue.
Implication:
Non-cooperation of Lekoil Ltd. in this audit indicates lack of commitment to the NEITI
reconciliation process.
Recommendation:
NEITI should take measures to ensure full compliance of covered entities with the annual
audit process, in view of revenue implications to the Government. It may also be necessary for
NEITI to activate its sanctions mechanisms.
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TWO
THE OIL AND GAS SECTOR IN NIGERIA
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TWO
THE OIL AND GAS SECTOR IN NIGERIA
2.1. Legal Framework and Fiscal Regime

2.1.1. Legal and Institutional Framework
Section 44(3) of the 1999 Constitution of the Federal Republic of Nigeria states that;
“The entire property and control of all minerals, mineral oils and natural gas in, under or
upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive
Economic Zone of Nigeria shall vest in the Government of the Federation and shall be
managed in such manner as may be prescribed by the National Assembly.”
The above implies that the Government of the Federation owns all natural resources upon
and within the Nigerian territory. Through the Federal Ministry of Petroleum Resources, it
oversees the activities in the petroleum industry in the country. The ministry is headed by a
minister who is appointed by the president subject to approval by the National Assembly.
2021 brought about major institutional reforms in the Oil and Gas industry, following the
introduction of the Petroleum Industry Act (PIA), 2021. The act introduced legal,
governance, regulatory and fiscal reforms and addressed legitimate concerns of host
communities. Some old legislations were repealed and these include;
◦ Associated Gas Re-injection Act, 1979. Cap. A25. Laws of the Federation of Nigeria,
2004, and its Amendments:
◦ Hydrocarbon Oil Refineries Act No. 17 of 1965, Cap. H5, Laws of the Federation of
Nigeria, 2004
◦ Motor Spirits (Returns) Act, Cap. M20, Laws of the Federation of Nigeria, 2004
◦ Nigerian National Petroleum Corporation (Projects) Act No. 94 of 1993. Cap. N124.
Laws of the Federation of Nigeria. 2004
◦ Nigerian National Petroleum Corporation Act (NNPC) 1977 No. 33, N123. Laws of
the Federation of Nigeria as amended. when NNPC ceases to exist under Section 54 (3)
of this Act
◦ Petroleum Products Pricing Regulatory Agency (Establishment) Act No. 8, 2003
Upon the completion of the conversion process described under Section 92 of the PIA, the
following will also be repealed:
◦ Petroleum Profit Tax Act, cap. PI3, LFN. 2004 (provided the repeal shall apply from the
effective date to any new acreage granted under the Act)
◦ The Deep Offshore and Inland Basin Production Sharing Contract Act, 2019, as
amended (provided the repeal shall apply from the effective date to any new acreage
granted under the Act).
Other noTable changes/introductions brought about by the PIA include;

◦ The establishment of Nigerian Upstream Petroleum Regulatory Commission
(NUPRC), also referred to as “the Commission”. The Commission is a body corporate
that oversees the upstream operations of the oil and gas sector in Nigeria.
◦ The establishment of Nigerian Midstream and Downstream Regulatory Authority
(NMDPRA), also referred to as “the Authority”, to regulate the midstream and
downstream petroleum operations, with robust provisions for gas and liquids
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operations.
◦ The incorporation of a limited liability company known as Nigerian National
Petroleum Company Limited (NNPC Limited) to which the determined assets, interests
and liabilities of NNPC and its subsidiaries will be transferred.
◦ The introduction of the Hydrocarbon tax and the application of the Company Income
Tax (CIT) to all companies operating in the oil and gas industry as these taxes will
replace the Petroleum Profit Tax (PPT).
◦ Changes in the computation of royalties.
◦ Establishment of the Host Communities Development Trust for execution of projects
for the benefit and sustainable development, economic empowerment opportunities,
infrastructural development, health care development, etc., for the host communities.
◦ Mandatory disclosure of contracts and Licenses.
◦ Introduction of open competitive bidding process which brought an end to the
discretionary award of mining licenses and leases.
The full text of the PIA 2021 can be found here 13 . A compendium of other Oil and Gas
Industry laws and regulations can be found here14 and tax laws can be found here15.
Although the PIA became law in 2021, the savings provision in Section 311 of the act allows
for some laws to be saved until the expiration of some licences/ leases and the fulfilment of
certain events. Refer to the savings provisions of the PIA for more information. This report
should be read with this in context. The Ministry of Petroleum Resources, headed by the
Minister of Petroleum, is responsible for setting, monitoring and administering government
policy for the sector, while other departments and agencies carry on different roles in the
industry. The position of Minister of Petroleum was held by the President in 2021.
See Table 8 below for a description of the responsibilities of the Government Institutions
directly involved in the oil and gas sector.
Table 8 - Responsibilities of Key Government Entities

Government Entity Key Responsibilities
Ministry of Petroleum The MPR has the overall mandate to formulate policies on the oil and gas sector and
Resources (MPR) supervise their implementation. The key functions include;
• Coordination and supervision of bi-lateral and multilateral relations affecting the
oil and gas sector
• Policy matters relating to research and development in petroleum and gas sectors of
the industry
• Formulation of policies to stimulate private industry investment and participation in
the oil and gas sector
Nigerian Upstream The NUPRC, also known as the Commission, has the statutory responsibility of
Petroleum Regulatory ensuring compliance to petroleum laws, regulations and guidelines in the Upstream Oil
Commission (NUPRC) and Gas Sector. The discharge of these responsibilities involves monitoring of
operations at drilling sites, producing wells, production platforms and flowstations,
crude oil export terminals, and all pipelines carrying crude oil, natural gas, while
carrying out the following functions, among others: The functions of NUPRC can be
found here 16.
13
Full Text of the PIA - http://www.petroleumindustrybill.com/wp-content/uploads/2021/09/Official-Gazette-of-the-Petroleum-Industry-Act-2021.pdf
14
A compendium of Oil and Gas Industry laws and regulations
15
Tax Laws
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Government Entity Key Responsibilities

Nigerian Midstream and The NMDPRA, also known as the Authority, has the mandate to regulate the midstream
Downstream Petroleum and downstream petroleum operations including technical, operational and
Regulatory Authority commercial activities. The functions of NMDPRA can be found here 17.
(NMDPRA)
Nigerian National NNPCL is the State-Owned Enterprise of Nigeria with the Federation having 100%
Petroleum Company share ownership, held on its behalf by the Ministry of Finance Incorporated and the
Limited (NNPCL) Ministry of Petroleum Resources Incorporated. NNPCL Carries out Exploratory
Activities and operational functions such as production, trading, refining,
transportation and marketing of crude oil. NNPCL also manages the interests/assets of
the government in the industry.
Federal Inland Revenue The FIRS is responsible for the administration of taxes in the sector. Read more about
Service (FIRS) the functions of FIRS here 18.
Niger Delta Development NDDC was set up to offer a lasting solution to the socio-economic difficulties of the
Commission (NDDC) Niger Delta Region and to facilitate the rapid and sustainable development of the Niger
Delta into a region that is economically prosperous, socially stable, ecologically
regenerative and politically peaceful. More about NDDC can be found here19.
Nigerian Content NCDMB is vested with the mandate to make procedures that will guide, monitor,
Development and coordinate and implement the provisions of the Nigerian Oil and Gas Industry Content
Monitoring Board Development Act, which is summarily to promote the development and utilization of
(NCDMB) in-country capacities for the industrialization of Nigeria. More about NCDMB can be
found here 20.
Federal Ministry of The FMFBNP is responsible for economic policy formulation, control and monitoring
Finance, Budget, and of the Federation’s revenues and expenditures. more details on FMFBNP can be found
National Planning here 21.
(FMFBNP)
Other government institutions and their roles can be found here . 22
2.1.2. Fiscal Regime

The government of Nigeria generates revenues from companies operating in the Oil and Gas
industry in the form of royalty and taxes and also through sales of crude oil by the NNPC.
Various laws and regulations guided the fiscal regime in 2021 and the major laws have been
mentioned above. The PIA has brought about changes to the Fiscal regime of the sector with
the introduction of new benefit streams and the changes to the revenue flows to the
Federation.
Table 9 below highlights the fiscal regime for 2021;
16
Functions of NUPRC - https://www.nuprc.gov.ng/functions-of-nuprc/
17
Functions of NMDPRA - https://www.nmdpra.gov.ng/our-mandate/
18
Functions of FIRS
19
Information on NDDC
20
Functions of NDCMB
21
https://www.finance.gov.ng/#/
22
Roles of Government Institutions in the oil and gas sector - https://neiti.gov.ng/legal
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Table 9 - Nigeria’s Oil and Gas Fiscal Regime in 2021

Fiscal Regime
1. Royalty
Crude Oil (onshore) 20%
Crude Oil (offshore)
• 100metres water depth 18.5%
• 101-200 metres water depth 16.5%
• >201 metres water depth 10%
• Frontier Basins 7.5%
• Inland Basins 7.5%
Additional Royalty computation: royalty rates based
on an increase in price that exceeds US$20 per barrel
shall be determined for crude oil condensates
US$0 - US$20 per barrel 0%
US$21 - US$60 per barrel 2.5%
US$61 - US$100 4%
US$101 - US$150 8%
>US$151 10%
Royalty on Gas
• Onshore 7% of gas sale
• Offshore 5% of gas sale
2. Flared Gas Payments

• >10000 bbls of crude oil per day US$2 per thousand standard cubic feet of gas
• <10000 bbls of crude oil per day US$0.50 per thousand standard cubic feet of gas
3. Petroleum Profit Tax (PPT)

• PPT Rate for JV & Sole Risk (Year 1 – Year 5 of operations) 66.75% of Chargeable Profit
• PPT Rate for JV & Sole Risk (After 5 years of operations) 85% of Chargeable Profit
• PPT Rate for Companies under the Production Sharing 50% of Chargeable Profit
Contract
4. Companies Income Tax (CIT)

CIT Rate 30% of Total Profit
5. Niger Delta Development Commission (NDDC) 3% on total annual budget of Oil producing
• NDDC Levy (including gas processing) companies operating in
the Niger-Delta
6. Nigerian Content Development and Monitoring Board

(NCDMB)
• NCDMB Levy 1% on total contract value in any project or
transaction in the upstream sector of the Nigerian
Oil and gas Industry
Changes in the Oil and Gas Fiscal Regime through the Enactment of PIA (2021)
With the enactment of the PIA 2021, major changes have been made to the fiscal regime in
Nigeria’s oil and gas sector. Chapter 4 of the PIA introduced the Petroleum Industry Fiscal
Framework (PIFF) with the following major changes:
◦ Removal of the PPT and its replacement with two taxes, namely: Hydrocarbon Tax
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(HT) and Companies Income Tax (CIT). These two taxes are to be paid by companies
engaged in upstream petroleum operations. CIT will be applied in accordance with the
Companies Income Tax Act. The HT rate will be graduated and dependent on area of
operation and the period that the mining lease was granted.
◦ Chargeable Tax shall be a percentage of aggregate chargeable profit for the
accounting period. For holders of PMLs, with respect to offshore and shallow water
areas, chargeable tax shall be 30% of crude profits while for the holders of PPLs, with
respect to offshore and shallow water areas, chargeable tax shall be 15% of crude oil
profits (Section 267 of the PIA)
◦ Changes in Royalty Rates to both Production/Terrain Based Royalties and Price Based
Royalties
1. Production/Terrain Based Royalties Computation
Crude Oil and Condensates
▪ Onshore - 15%
▪ 0 - 200m water depth (Shallow Offshore) - 12.5%
▪ Above 200m water depth (Deep Offshore) - 7.5%
▪ Frontier Basins - 7.5%
* Where production in Deep Offshore Fields is ≤ 50,000 bopd - 5%

** Where production in Onshore, Shallow Offshore, Frontier and Marginal Fields is ≤ 10,000
bopd
▪ 5% for the first 5,000 bopd
▪ 7.5% for volumes above 5,000 bopd
Gas and NGLs

* Irrespective of the terrain gas is produced - 5%
* Where the gas is utilized in-country - 2.5%
2. Price Based Royalties

Crude Oil and Condensates (prices per barrels) Applies to Onshore, Shallow Water and Deep
Offshore production but not to Production from Frontier terrains.
▪ Below $50 - 0%
▪ At $100 - 5%
▪ Above $150 - 10%
Where the price is in between $50 to $100 and $100 to $150, the royalty shall be
derived by linear interpolation.
Royalty derived from "Royalty by Price" shall be for the credit of Nigerian Sovereign
Investment Authority (NSIA).
• Other fiscal changes include:
◦ Ascertainment of crude oil revenue (Sections 262(1) & 262(2) of the PIA
◦ Allowable deductions (Section 263 of the PIA)
◦ Non-allowable deductions (Section 264 of the PIA)
◦ Chargeable profits and allowances (Section 264 of the PIA)
◦ Consolidation of Costs and Taxes
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◦ Change in Penalty Regime (Sections 277, 297 and 302)
In addition to the above, Gas Flare Penalties collected by Nigerian Upstream Petroleum
Regulatory Commission (NUPRC) on behalf of the Federation prior to the implementation of
PIA will no longer be a revenue to the Federation. Money received from gas flare penalties by
the Commission will now be for the purpose of environmental remediation and relief of the
host communities of the settlors on which the penalties are levies as provided for in Section
104(4) of the PIA.
It should also be noted that, the PIA made provisions for other benefit streams from the
petroleum sector which are also not applicable for 2021 audit due to the fact that the full
implementation of PIA did not commence in 2021.
The new benefit streams include:

o Interest and penalty on debt
This is the interest penalty at the prevailing CBN rate accrued on outstanding royalties, fees,
rents, production or profit shares or required payments to the commission on behalf of the
Federation, which are due and remain unpaid for a period of 30 days after it becomes due for
payment.
o Domestic gas delivery penalty

This is the penalty imposed on the lessee for failure to comply with the domestic gas delivery
obligation. The penalty is $3.50 per MMBtu of gas not delivered, which may be adjusted by
the commission as provided for in the PIA. The Domestic Gas Delivery Obligation regulation
can be found here.
o Upstream Environmental remediation fund

The upstream environmental remediation fund is established for the upstream petroleum
operations under licenses and leases as provided for in the Petroleum Industry Act, 2021.
This is a financial contribution to be paid by the licensee or lessee for the rehabilitation or
management of negative environmental impacts with respect to the licenses or lease. The
commission is responsible for the administration and management of the Fund in accordance
with the PIA. The draft Upstream Environmental Remediation Fund Regulations can be found
here.
o Host Community Development Fund

The PIA, 2021 provides for the establishment of the fund by the constitution of each host
communities development trust to be known as Host communities development trust fund
and funded by each settlor (or where applicable, through the operator) through annual
contribution to the applicable host communities development trust fund of an amount equal
to three per cent (3%) of the settlor’s actual annual operating expenditure for the preceding
financial year in the upstream petroleum operations affecting the Host Communities for
which the Fund was established. The gazetted Nigerian Petroleum Host Communities
Development Regulations can be found here.
2.2. Contracts, Licences and Leases in the Nigerian Oil and Gas Industry
All mining and prospective licenses, prior to the introduction of the PIA, were acquired in
accordance with the provisions of the Petroleum Act 1969 and other relevant subsidiary
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legislations. The Minister of Petroleum was empowered by the Act to issue (and revoke) all
licenses for prospecting, exploration and production of crude oil and gas. Section 2(2) of the
Petroleum Act provides that only citizens or companies incorporated in Nigeria can validly
partake in the oil and gas industry, for activities in exploration, drilling, storage, production,
refining and transportation of the oil and gas.
The Petroleum act provides for the following category of licenses / leases:
◦ Oil Exploration License (OEL) which entitles the licensee to the non-exclusive right to
explore for oil and gas within the area of the grant.
◦ Oil Prospecting License (OPL) which confers on the licensee the exclusive right to
explore for oil and gas within the area of the grant, and to carry away and dispose of
the petroleum won and saved during its prospective operations. This license is usually
issued for a period not exceeding 5 years (Onshore and shallow waters) and 10 years
(deep offshore and inland basins).
◦ Oil Mining Leases (OML) which entitles the licensee the exclusive right within the
leased area to conduct exploration and prospective operations and to win, get, work,
store, carry away, transport, export or otherwise treat petroleum discovered in or
under the lease area. It allows full commercial production (at least 10,000bpd) in a
lease area. The lease is usually for a period of 20 years.
Section 70 (1) of the PIA 2021 prescribes new types of licences and leases for upstream
petroleum operations, these include:
• Petroleum Exploration Licence (PEL) which may be granted to qualified applicants to
carry out petroleum exploration operations on a non-exclusive basis.
• Petroleum Prospecting Licence (PPL) which may be granted to qualified applicants to drill
exploration and appraisal wells and do corresponding tests on an exclusive basis and also
carry out petroleum exploration operations on a non-exclusive basis.
• Petroleum Mining Lease (PML) which may be granted to qualified applicants to win,
work, carry away and dispose of crude oil, condensates and natural gas on an exclusive
basis, etc.
The NUPRC has issued a regulation for the conversion and renewal of licences and leases and
this can be found here . 23
Post PIA enactment, NUPRC regulates all matters that relate to licenses, leases and contracts in
the upstream petroleum sector. Section 68(2) of the PIA empowers the NUPRC to administer
any acreage for upstream operations in Nigeria. Section 69 (1) also requires NUPRC to adopt
a national grid system for acreage management. The NUPRC, as at August 2022 has put out a
draft regulation “Acreage Management, Drilling and Production Regulations” which will be
the guide for the process.
Contracts
The operating contracts in the Nigeria oil and gas industry operational in year 2021 were the
following; Joint Operating Agreements ( JOA), Production Sharing Contracts (PSCs), Sole Risk
(SR), Service Contracts (SCs), the Modified Carry Agreements (MCAs) and Repayment
Agreements (RA). The SCs is a variation of the PSC arrangement while MCA and RA are
funding arrangements for JVs (See Figure 3).
23
Convesion and renewal regulation - https://www.nuprc.gov.ng/wp-content/uploads/2022/11/Conversion-and-Renewal-Licences-and-Leases-Publication.pdf
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Figure 2- 2021 Production Contract Arrangements
• Joint Ventures ( JVs) are governed by a Joint Operating Agreement

JOINT OPERATING ( JOA) which covers issues such as appointment and duties of
AGREEMENT (JOA) operator, audit rights, formats and periodicity of reports, control of
Bank accounts, nominations for crude liftings etc.
• Partnership Between NNPC & companies funded by Cash Call
• Production shared on equity basis
Production Sharing • 100% funding by PSC contractors

Contract (PSC) • Production shared based on entitlements in the contract
• Crude Oil and Gas allocated for Royalty, Tax, Cost and Profit
Other Financing • Modification Carry Agreements (MCA) by JV partner (Operator)

Agreements • Repayment Agreements (RA): Crude allocation to operator for the
settlement for pre 2016 cash call arrears
• Crude Allocation to defray Financing and compensation
Independents Nigeria • These are participatory rights by the Federal Government of Nigeria
Sao Tome Joint to contractors with respect to OMLs
Development Authority • Crude owned by operators while the operators pay Royalty and PPT
Production/Sole Risk
Farm-Out Agreement • This is an agreement to “farm-out” marginal fields from an OML

• The Marginal fields were hitherto part of OML held other companies
but reallocated to indigenous companies.
• They are targeted at abandoned or unproductive fields in lease areas
covered by OMLs.
• Crude oil and gas are owned by operators while the operators pay
Royalty and PPT
• Government reserves the right to participating interest at any time
(Back-in right).
Service Contract (SC) • An adaptation of PSC (100% funding by Contractor)

• Contract covers a single service area and renumeration of service
contractor only based on commercial production
• The only service contractor is AENR but the underlying asset has been
transferred to NPDC, the upstream subsidiary of NNPC.
• Crude Allocation to cover agreed renumerations.
NUPRC is responsible for providing the regulatory framework of the contracts listed above
and also keeps a listing of contracts and the type of contractual arrangements in a register.
The NNPC usually signs the agreement on behalf of the Federation and has copies of the
agreements entered on behalf of the Federation. Details of contracts and licenses involved in
the various arrangements as at 2021 can be found here . However, there is no public
disclosure of details of any contract by NUPRC, but NNPC contract disclosures can be found
here . More information on contracts in the sector can be found here . 24
2.2.1. Contracts and License Allocation

The Petroleum Act of 1969 (as amended) provided the legal basis for the license allocation
system in Nigeria prior to the enactment of the PIA. Section 2 (1)(b) of the Petroleum Act
1969 provides for discretionary award by the Minister. There are typically guidelines set for
bid rounds for the award of OPLs and for the grant of license to operate marginal fields.
Post-PIA enactment, Section 73 of the PIA, 2021 provides for a bidding process in respect of
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PPLs and PMLs allocation, while a PEL may be granted upon the successful completion of an
application process. PPLs and PMLs may only be granted to the winner of a bid round
conducted in accordance to the Petroleum Licensing Round Regulation, 2022 (read here ). 25
The only exceptions to Section 73 of the Act are stated in Sections 71(5) and 74(3) of the PIA.
Section 72(5) also states that the Minister may grant a PPL to a qualified applicant
recommended by the Commission. A licensing round plan for a mini-bid licensing round in
progress at the time of this report can be found here . The Commission has also put out a draft
26
regulation for the upstream petroleum assignment of interest which will govern the
procedure for the assignment of interest in a licence or lease and also the grant of consent by
the minister. This draft regulation can be found here . The NUPRC has a guideline for the 27
process of award of marginal fields in Nigeria, which is usually by a bid round. The guideline
for the award of marginal fields can be found here . It is important to note that all producing
28
marginal field contracts will be converted to petroleum mining leases in accordance to

Section 94(1), while all discoveries declared as marginal fields prior to 1st January 2021,
which are not yet producing shall be converted to Petroleum prospecting licences.
2.2.2. Bidding Rounds Process for Award of Petroleum Licences
The bidding process starts with an official advert signifying blocks available. Below is Figure
3, which summarizes the process of bidding for Licenses. There was no bid round in 2021.
Figure 3 - Bidding Rounds Process Summary
Publishing of licensing round Publish the commencement of the Prequalification of participants

plan on NUPRC Website licensing round in at least 2 local (legal, financial and technical
dailies and 2 international dailies criteria)
Award to winning bidders and Technical and commercial bid Technical and commercial bid
payment of signature bonus etc evaluation to verify satisfaction submission and opening
and fulfilment of other conditions. of parameters
24
Information on oil and gas contracts and licenses- https://neiti.gov.ng/legal
25
Petroleum licencing Round Regulation 2022 - https://www.nuprc.gov.ng/wp-content/uploads/2022/11/Petroleum-Licensing-Round-Regulations-2022-1.pdf
26
2022 Mini bid licencing round - https://www.nuprc.gov.ng/wp-content/uploads/2023/03/Licencing-Round-Plan.pdf
27
Draft Nigerian Upstream Petroleum Assignmemt of Interest Regulations, 2023 - https://www.nuprc.gov.ng/wp-content/uploads/2023/07/Draft-Nigeria-Upstream-
Petroleum-Assignment-of-Interests-Regulations.pdf
28
Guideline for the award and operations of marginal fields- https://www.nuprc.gov.ng/wp-content/uploads/2020/08/Guidelines-for-the-Award-and-Operations-
of-Marginal-Fields-in-Nigeria.pdf
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2.2.2.1. Marginal Field Bid Round Initiated in 2020
In June 2020, a marginal field bid process involving 57 fields was announced under the
guidelines set by the NUPRC (then DPR). The Marginal Field award process was managed
through an electronic portal and is depicted in the Figure below;
Figure 4– Marginal Field Award Process for the Bid Round Initiated in 2020
Purchase of Purchase of
Data Prying Data competent
Expression Leasing field specific
Stage report persons report
of interest data leasing fee
www.marginal. Data prying fee Fee for field Fee for selected
Lease data is
dpr.gov.ng/ access to data on specific report fields
available for
Registration fee available acreages
fields
Prequalitication is released
of bidders
Award of Farm out

Technical Technical agreement
and Winners
and Finance negotiation
Bid Financial and signing
Submssion Bid Signature
Evaluation bonus
Source: NUPRC’s marginal fields website 29
The 2020 EITI report mentioned that the marginal field award process was still in progress
and that information was not provided by the NUPRC for reporting. This report thus provides
information about the process since it has been concluded. According to NUPRC, there were
665 applicants for the 2020 Marginal Field bid round (See list in Appendix 3). The pre-
qualification and evaluation criteria, as well as the technical and financial evaluation criteria
used in evaluating all applicants are attached as Appendix 4. A total of 106 companies
emerged from the process as the Marginal Field Bid Round awardees (See Appendix 5). It
should however be noted that only five companies (See Appendix 6) had made payment of
signature bonus based on 2021 audit information provided by NUPRC. According to the
Commission’s regulation, all successful applicants whose names are in the Notice of
Preferred Bidder Status ought to have made payment of signature bonus, prior to award. It
should be noted that four other companies whose names were not on the list of awardees paid
signature bonus on 2020/2021 marginal fields award.
2.2.3. Licences and Leases granted in 2021
According to the report provided by NUPRC, two licences were granted in 2021 pursuant to
Section 2(1)(b & C) of the Petroleum Act 1969. Details of the licences are in Table 10 below:
29
Marginal field process explained by NUPRC
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Table 10 – Licences/Leases Issued in 2021

S/N Licence Type Companies Asset Number Date of Grant
1 Oil Mining Lease (OML) Damas Petrochemicals and Refinery OML 110 February 5, 2021
2 Oil Mining Lease (OML) Cadence Capital Limited OML 120 & Not provided
General Hydrocarbons Limited OML 121
Source: NUPRC
The process for the awards of the leases granted in 2021 was in accordance with the
guidelines and procedures for obtaining Minister’s consent to the assignment of interests in
the oil and gas assets which can be found here . No information was provided by NUPRC on
30
transfer of licenses in 2021.
2.3. Register of Licenses
The Petroleum Industry Act designates the NUPRC as the custodian of Register for all licenses
and leases for the upstream petroleum operations and NMDPRA for midstream and
downstream operations. Section 219 of the PIA 2021 states that the Commission shall
maintain and make publicly available, a register of leases, licences, permits and
authorizations, issued, revoked, suspended or withdrawn or any exemptions granted. This
register is expected to be kept in electronic format. Requirement 2.3 of the EITI Standard
requires the disclosure of details below:
▪ The licence holder
▪ The coordinates/ size and location of licence area
▪ Date of Application for licence
▪ Date of Award
▪ Duration of licence
▪ Commodity being produced
NUPRC has a published acreage situation report for the upstream petroleum operations on its
website. The IA reviewed the information which included all the material companies covered
in the audit and other companies operating in the upstream sector. The register provided
required information as prescribed by the EITI, including details of the licence holders, the
size of the area of licence in square kilometres, the geological location and terrain of the
licence, the dates of award and expiration dates of the licence. It however does not include the
coordinates of the license or the dates of application of the license. The acreage situation
report for the upstream petroleum operations published by the Commission can be found
here . 31
2.4. Disclosure of Contracts & Licences

2.4.1. Government Policy & Legal Framework
Prior to the enactment of the PIA 2021, there was no law that mandated the disclosure of
contracts and licences in Nigeria. However, with the enactment of the PIA, government’s
30
Acreage situation report - https://www.nuprc.gov.ng/acreage-situation-reports/
31
Procedure for license awarded in 2020 - https://www.nuprc.gov.ng/wp-content/uploads/2021/04/DPR-Guidelines-on-Asset-Divestment-2021.pdf
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policy on License disclosure is contained in Section 83 (3)(5) and Section 85. Section 83 states
that the text of any existing contract, licence or lease and any amendment or side letter with
NNPC shall not be confidential and should be published on the website of the commission.
Section 85 also provides for a model contract. As at the time of this report, the Commission
had not publicly disclosed any contract. The Commission indicated that it is in the process of
developing a regulation that would guide the implementation of Section 83 of the PIA.
However, NNPC has published on its website, all contracts it signed between 1st January
2021 and August 2021 (when the PIA was signed into law). Theses are:
1. PSC Renewal Agreement for OML 118

2. Annex to PSC Renewal Agreement for OML 118
3. Gas Sale and Purchase Agreement for OML 130
4. Gas Development Agreement for OML 143
5. Sale and Purchase Agreement for OMLs 86 & 88
In addition, NNPCL has also published a model term contract and model DSDP contract on
crude oil sales. More information on contract disclosure practice in the sector can be found
here . 32
2.4.2. Beneficial Ownership (BO)
Beneficial Owners (BO) are persons or organizations that have the right to receive income,
profits, etc. from a property or investment that they own. The EITI Standard of 2019, the
global standard for the good governance of oil, gas and mineral resources extracting
companies has mandated in Requirement 2.5 that “implementing countries maintain a
publicly available register of the beneficial owners of the corporate entity(ies) that apply for
or hold a participating interest in an exploration or production oil, gas or mining license or
contract, including the identity(ies) of their beneficial owner(s), the level of ownership and
details about how ownership or control is exerted”.
Majority of the oil companies in Nigeria exhibit a complex structure of ownership which
makes it difficult to identify the real individuals behind the companies and the practice of
cloaking the real owners remain prevalent in the country. It is also a common practice for
companies to hold interest in other companies thereby shielding the identity of the natural
persons who ultimately benefit from the activities of the company. This practice is not
unlawful as the law permits legal ownership by corporate bodies.
2.4.3. Beneficial Ownership Definition
According to the EITI Standard 2019, A beneficial owner in respect of a company means the
natural person(s) who directly or indirectly ultimately owns or controls the corporate entity.
The Companies and Allied Matters Act 2020, also defines anyone with 5% holding in a
company as persons with significant control of the company. The NSWG agreed to adopt the
former definition for beneficial ownership which is still consistent with the EITI Standard. On
23rd November 2022, the Minister of Trade, Industry and Investment approved the Persons
with Significant Control Regulations (PSC) 2022, in exercise of its power under Section 867
of CAMA 2020. CAC PSC Regulations 2022 was formulated to set out guidelines for the
32
Term contract - https://cms1977.nnpcgroup.com/uploads/TERM_CONTRACT_Template_4838264723.pdf?updated_at=2022-12-16T14:42:24.275Z
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disclosure of persons with significant control in a company, and aid transparency in the
beneficial ownership structure of entities registered with CAC. This will in turn aid Nigeria in
adhering to its international obligations under EITI.
2.4.4. Government Policies on BO Disclosure in Nigeria
Section 7(f) of the PIA 2021 mandates the NUPRC, as part of its technical regulatory
functions, to keep public registers of beneficial ownership. Prior to this law, the Corporate
Affairs Commission had taken the necessary steps to ensure that their PSC register, which
collects information from all companies registered in Nigeria was live on its website (See
here). CAC usually collects PSC information at the time of filing annual returns or at the time
of any other updates to records of the company. Companies’ data on Persons with Significant
Control is also available to the public without a required fee.
In addition and prior to the enactment of the PIA, NEITI had committed to ensuring overall
compliance with the EITI Standard on disclosure of beneficial owners of oil companies by
collating information from the NEITI Audit. The NEITI Beneficial ownership portal has 33
information on beneficial ownership.
NUPRC has a beneficial ownership website titled: the Nigerian Oil and Gas Asset Beneficial
Ownership Register (NOGABAR ) that is expected to show the beneficial owners of all
34
corporate entities that operate and invest in Nigeria’s upstream extractive industry. Section
7(f) of the PIA 2021 mandates the NUPRC, as part of its technical regulatory functions, to
keep public registers of beneficial ownership. Although there are some information on the
website, the level of implementation of the above Section of the PIA is very low.
2.4.5. Beneficial Ownership Data Collected from Covered Companies
Beneficial owner data was requested from all companies covered in this Report. The data was
used to update the NEITI Beneficial Ownership Data portal. All companies have some
beneficial ownership data publicly accessible either through the NEITI Beneficial Ownership
Portal or the CAC Portal, except China National Offshore Oil Corporation Limited, Enageed
Resources Ltd., Suntrust Oil and Company Nigeria Ltd. and Lekoil Limited. The NUPRC had
also requested for beneficial ownership data from all owners of 5% equity and above of
35
licences and leases. This information will be made public through the NOGABOR portal.
NEITI has also published an assessment of the comprehensiveness of publicly available

beneficial ownership data in Nigeria here .
Some of the covered Companies did not provide information of the natural person(s) who
own or control interest in the companies neither were links to public listings provided. The
companies do not have this information on the NEITI or CAC portals. These companies are
mentioned in the Table below;
33
DSDP contract - https://cms1977.nnpcgroup.com/uploads/DSDP_Template_bc3ddf5c34.pdf?updated_at=2023-02-20T09:02:50.053Z
34
NEITI’s Beneficial Ownership Portal
35
NUPRC’s Beneficial Ownership Website
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Table 11 – List of Companies that did not provide details of natural person(s)
S/N List of Companies that did not provide details of natural person(s)
1 Addax Petroleum Development Ltd
2 Addax Petroleum Exploration Nig. Ltd
3 Chevron Nigeria Ltd
4 Midwestern Oil & Gas
5 Nigeria Agip Exploration
6 NNPC E & P Ltd
7 Oando Oil Limited
State Participation
Nigerian National Petroleum Company Limited (NNPCL) is Nigeria’s State-owned company
involved in the upstream and downstream oil and gas sector. The company evolved from the
Nigerian National Petroleum Corporation and currently engages in all commercial activities
relating to the petroleum industry.
2.6. Legal Framework of NNPCL
The ownership of NNPCL is vested in the government with Ministry of Finance Incorporated
(MOFI) and Ministry of Petroleum Incorporated (MOPI) jointly holding the shares of
N200billion in equal amount, on behalf of the Federation. Section 53 of the Petroleum
Industry Act provides the basis for which NNPCL, was duly incorporated at the Corporate
Affairs Commission (CAC), under the Companies and Allied Matters Act (CAMA). The PIA
provides for some assets and liabilities to be transferred from NNPC to NNPC Limited. The
roles of NNPC Limited are to:
◦ carry out petroleum operations on a commercial basis, comparable to private
companies in Nigeria carrying out similar activities including exemption to Public
Procurement Act, Fiscal Responsibility Act and Treasury Single Account;
◦ be vested as the concessionaire of all Production Sharing Contracts (PSC), Profit
Sharing and Risk Service Contracts as the National oil company on behalf of the
Federation in line with its competencies;
◦ lift and sell royalty oil and tax oil on behalf of the Commission and the Service
respectively for an agreed commercial fee and in the case of profit oil and profit gas
payable to the concessionaire, NNPCL shall promptly remit the proceeds of the sales of
the profit oil and profit gas to the Federation less its 30% for management fee and
Frontier Exploration Fund as specified in Section 9 (4) of the PIA;
◦ carry out test marketing to ascertain the value of crude oil and report to the
Commission;
◦ be vested with the rights to natural gas under production sharing contracts entered
into prior to and after the effective date of the PIA;
◦ carry out the management of production sharing contracts for a fee, based on the
profit oil share or profit gas share in accordance with paragraph ©;
◦ with respect to any joint operating agreement in which NNPCL is a party on the
effective date assume the working interest held by NNPCL irrespective of whether
such licence or lease is converted under Section 92 of the PIA;
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◦ engage in the business of renewables and other energy investments;

◦ promote the domestic use of natural gas through development and operation of large-
scale gas utilisation industries;
◦ maintain the role of NNPC, under Section 54 of the PIA;
◦ carry out task requested by the Commission or Authority on a fee basis and generally
engage in activities that ensure national energy security in an efficient manner, in the
overall interest of the Federation;
◦ carry out such other tasks as may be determined by the Board of NNPCL; and
◦ make NNPCL supplier of last resort for security reasons and all associated costs shall
be for the account of the Federation
Governance of NNPCL
The Board of the NNPCL is expected to perform in accordance with the Companies and Allied
Matters Act, its Articles of Association and also carry out the responsibilities prescribed
under the PIA 2021. The responsibilities prescribed under the PIA include;
• Be responsible for the strategic guidance and determining the business structure of
NNPCL.
• Be responsible for the approval of the annual budget of NNPCL.
• Act in good faith and exercise due diligence and care in the best interest of NNPCL, the
shareholders and the sustainable development of Nigeria.
• apply the highest ethical standards in performing its duties, taking into account the
interest of its stakeholders and the fiduciary duty of the directors to NNPC Limited;
• make decisions guided by commercial and technical considerations that represents good
international petroleum industry practices;
• determine and report to the shareholders of NNPC Limited on key performance indicators
on at least annual basis;
• review and guide corporate strategy, major plan of action, risk, policy and business plan;
• set performance objectives for NNPC Limited, the Board of NNPC Limited, members of
NNPC Limited’s management and individual business units and subsidiaries of NNPC
Limited;
• monitor NNPC Limited’s corporate performance;
• oversee major capitals expenditures, acquisitions and divestitures;
• monitor the effectiveness of NNPC Limited’s governance practices and propose and
implement changes;
• select, compensate, monitor and replace management executives and oversee succession
plan.
• align key executive and board of NNPC Limited remuneration with the longer term
interests of NNPC Limited, its shareholders and stakeholders.
• monitor and address potential conflicts of interest of management and members of the
board of NNPC Limited and breach of fiduciary duty by members of the board of NNPC
Limited;
• ensure the integrity of NNPC Limited’s accounting and financial reporting systems,
including audit of NNPC Limited’s accounts by independent third party;
• ensure that appropriate system of control is in place for risk, management, financial and
operational control and compliance with applicable law and relevant standards;
• oversee the process of disclosure and communications to shareholders and the public;
and
• determine the dividend policy of NNPC Limited, ensure sustained growth and sound
financial base for NNPC Limited.
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Board membership prescribed by the PIA 2021, as may be appointed by the President of
Nigeria are;
◦ a Non-Executive Chairman
◦ the Chief Executive of NNPC Limited
◦ the Chief Financial Officer of NNPC Limited
◦ a representative of the Ministry of Petroleum, not below the rank of a Director
◦ a representative of the Ministry of Finance not below the rank of a Director
◦ six Non-Executive members, one from each geopolitical zone
2.6.1. Operations, Structure and Governance of NNPC in 2021
For the year 2021, the NNPC operated its old group structure through its subsidiaries and
Strategic Business Units, which cover the entire spectrum of Nigeria’s oil industry and gas
operations: exploration and production, gas development, refining, distribution,
petrochemicals, engineering, and commercial investments. The Group also had interests in
shipping, insurance, medical services and telecommunications. See below a list of NNPC
subsidiaries in 2021.
Table 12 – NNPC Subsidiaries in 2021

S/ Business Units Service Units Holdings Country' of Principal Business activity
N incorporation
1 NNPC Retail Ltd 100% Nigeria Retail Business (Refined products, lubricants, LPS, CNG)
and Non-fuel businessesail
2 Duke Global Energy Investment 100% Nigeria Exploration and production: Oil servicing
Limited
3 Duke Oil Senices UK Limited 100% United Providing logistics services to Duke Oil Incorporated
Kingdom
4 Duke Oil Company Inc 100% Panama Marketing of crude oil and petroleum products
5 Nigerian Petroleum Development 100% Nigeria Nigeria Exploration and production
Company
6 Warn Refining and Petrochemical 100% Nigeria Refining of crude oil and manufacturing of
Company Limited (WRPC) petrochemicals
7 Nigerian Gas Company Limited 100% Nigeria Transmission and distribution of Nigeria’s natural gas.
8 Port-Harcourt Refining Company 100% Nigeria Refining of crude oil
Limited (PHRC)
9 Petroleum Products Marketing 100% Nigeria Nigeria Petroleum product marketing and distribution
Company Limited (PPMC)
10 National Engineering and Technical 100% Nigeria Nigeria Engineering, procurement, construction and
Company Limited technical services
11 Integrated Data Sendees Limited 100% Nigeria Nigeria Geophysical and petroleum engineering sendees
(IDSL)
12 The Wheel Insurance Company 100% Guernsey, Providing reinsurance cover in respect of excess
Channel Islands capacity of NNPC oil assets transferred abroad
13 Nigerian Gas Marketing Company 100% Nigeria Sales and marketing of gas
Limited (NGMC)
14 Nigerian Pipelines and Storage 100% Nigeria Nigeria Transportation and storage of petroleum
Company Limited (NPSC) products.
15 NNPC Health Maintenance 99% Nigeria Provision of health insurance to individuals, families,
Organisation and corporate groups.
16 Ngas Limited 62% Bermuda Shipment and delivery of gas
17 Nidas Marine Limited 100% Nigeria Shipping and marine transportation
18 Nidas Shipping Limited 100% United Shipping and marine transportation
Kingdom
19 NNPC Liquefied Petroleum Gas 100% Nigeria Liquified petroleum gas sales
(NNPC LPG)
20 NNPC LNG Limited 100% Nigeria 100% Nigeria Liquified natural gas sales
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S/ Business Units Service Units Holdings Country' of Principal Business activity

N incorporation
21 NNPC Oilfield Sendees Limited 99% Nigeria Sendees
22 NNPC Gas & Power Investment 100% Nigeria Energy, gas and power investment services
Company Limited
23 National Petroleum 100% Nigeria Telecommunications investment
Telecommunication Limited (NAPET)
24 NNPC Gas and Power Investment 100% Nigeria Gas and power operations
Company (NGPIC)
Source: NNPC 2021 Group AFS
All oil and gas upstream assets belonging to the State were held and managed by NNPC
through The National Petroleum Investment and Management Services (NNPC Upstream
Investment Management Services) and from which a few assets are assigned to Nigerian
Petroleum Development Company (NPDC) Limited (NNPC E&P Limited (NEPL) Limited) as
operator for capacity building.
NAPIMS was the custodian and manager of OMLs that were considered as Federation assets.
NAPIMS was also the Federation’s representative in JVs, where the Federation has equity
holdings and pays cash calls (Chapter 5 has details of cash calls). The NNPC is also the
concessionaire to the government in the PSCs and signs on its behalf.
2.6.2. NNPC’s Financial Relationships/Transactions in 2021 and post passage of

PIA
The financial relationship and transactions of NNPC with the government in 2021 was
guided by the provisions of Section 7(4)b of the NNPC Act which empowers NNPC to receive
all monies due to the Federation into the Corporation’s account and defray all expenses it
incurs during its operations from such fund.
The above forms the basis for NNPC’s deductions from revenue (See Appendix 22 for details
of deductions), of certain expenditures, some of which could be described as quasi-fiscal.
These expenditures, as classified by NNPC and reported to Federation Accounts Allocation
Committee (FAAC) in 2021, include the following:
◦ JV cost recovery (these are cash call and other production related expenses)
◦ Pipeline repairs and maintenance cost (Strategic holding cost, pipeline management
cost etc.)
◦ Under recovery/crude oil and production loses (under recovery is the same as PMS
subsidy)
◦ Government priority projects (these are gas infrastructure development projects such
as OB3 gas supply line, Trans-Sahara gas pipeline, Escravos-Lagos pipeline expansion
etc.)
The Financial relationship between NNPC and the Federation in 2021 is depicted below:
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Figure 5 – Flow of oil and gas revenue from NNPC’s operations into the Federation
account pre-passage of PIA
NNPC lifting from JV &

Oil Field Terminals PSC operations
Equity Crude 3rd Party Finance/ Other Domestic Crude

Export MCA Lifting Lifgting (445kdpd)
Share
of profit Local Refining
Debt Direct Sales Direct

CBN/NNPC Service Purchase
JP Morgan US$ Royalty to PPT/CIT/
Crude Oil & DPR EDT to
Gas Accounts FIRS Direct Export
CBN/DPR CBN/FIRS JP Adjustment

JP Morgan US$ Morgan US$ for Subsidy,
Payment to Losses &
Crude Oil Crude Oil
CBN/NNPC Pipeline
Account Account
JVCC Mgt.
Account Costs
CBN/NNPC
Naira Crude Oil
Account
Federation
Source: NNPC website
It should be noted that Section 54(1) of the PIA, 2021 provides that the Minister of Petroleum
and the Minister of Finance shall within 18 months of the effective date of the PIA identify
and transfer assets, interests and liabilities of NNPC to NNPCL. However, this provision of the
PIA has not been effected, but NNPCL has taken over all the Federation assets in the JVs and
operate as a business entity. This means that the sale of equity crude proceeds, which,
hitherto went to the Federation, automatically become revenue to the NNPCL. The PIA
however requires NNPCL to settle applicable taxes, royalty and pay dividend to the
shareholders (MOFI and MOPI). NNPCL and any of its subsidiaries is to conduct their affairs
on a commercial basis in a profiTable and efficient manner without recourse to government
funds, operating as a Companies and Allied Matters Act entity, declaring dividends to its
shareholders, and retaining 20% of profits as retained earnings to grow its businesses.
The PIA also provides for the NNPCL to manage the concession of all Production Sharing
Contracts (PSC), Profit Sharing and Risk Service Contracts as the National Oil Company on
behalf of the Federation in line with its competencies. Therefore, NNPCL will lift and sell
royalty oil and tax oil on behalf of the NUPRC and FIRS respectively (where they are collected
in-kind), for an agreed commercial fee and in the case of profit oil and profit gas payable to
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the concessionaire, NNPCL shall promptly remit the proceeds of the sales of the profit oil and
profit gas to the Federation less 30% for management fee and Frontier Exploration Fund as
specified in Section 64(C) and 9(4) of the PIA. However, there is the need for clarity as to what
percentage goes for frontier exploration fund and NNPCL management fee.
The Financial relationship between NNPCL and the Federation post-passage of PIA is depicted
below.
Figure 6 - Flow of oil and gas revenue from NNPC’s operations into the Federation
account post-passage of PIA
Oil Field
NNPC Ltd
profit oil/gas from In-Kind NNPCL’s Taxes, Royalty and

PSC Operations lifting from other fees from JVs & other
PSC Operations operations
Dividend from NNPCL’s

operations
CBN/NNPC
30% for Mgt.
JP Morgan Less agreed
& Frontier
USD Crude Mgt. fee
exploration
Oil & Gas
fund
Accounts
70% max Royalty & Royalty &

of PSC concession concession
Profit rental to rental to
Oil & CBN/NUPRC CBN/NUPRC
Profit JP Morgan JP Morgan
Gas USD Crude USD Crude
Oil Account Oil Account
Federation Account
2.6.3. Federation Resource Assets Held by NNPC in 2021

Joint Ventures (JV)
NNPC represented the Federation in 12 Joint Ventures ( JVs) with at least 50% equity interest
in each joint Venture . The JVs operated by AMNI International Petroleum Development
36
Company (AMNI) and West African Exploration and Production Company Limited (WAEP)
did not produce in 2021.
36
NNPC 2021 Audited Financial Statement
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Table 13 – Federation’s 2021 Upstream Petroleum Operations Joint

Venture Arrangements
FEDERATION’S INTEREST
OPERATOR OPL/(OML) 2021 (%) 2020 (%)
Shell Petroleum Development Company of Nigeria Limited 17,20,21,22,23,25,27,
28,31,32,33,35,36,43, 55 55
45,4674,77,79
Chevron Nigeria Limited 49,51,89,91,86,88,90,
95 60 60
Total E&P Nigeria Limited 99, 100, 102, 58 60 60
Mobil producing Nigeria Unlimited 104, 67, 68, 70 60 60
AITEO Exploration and Production Limited 29 55 55
Eroton Exploration and Production Company Limited 18 55 55
First E & P Development Company Limited 83, 85 60 60
Seplat Petroleum Development Company 53 60 60
West African Exploration and Production Company Limited 71, 72 55 55
AMNI International Petroleum Development Company 52 60 60
Belema Oil Producing Limited 55 60 60
Heirs holdings Oil and Gas Limited 17 55 -
The NNPC also has participating interest in Escravos gas to liquids project (the “EGTL Project”). The participating interest is 60% and the operator
is Chevron Nigeria Limited (CNL).
Source: NAPIMS 2021 Audited Financial Statement
It should be noted that the assets in Table 13 will be transferred to NNPC Ltd to operate as a
business entity when the relevant Section of the law is fully implemented as explained above.
Production Sharing Contracts (PSCs)

NNPC also participates in Production Sharing Contracts (PSCs) which is an arrangement or
contract where the oil company undertakes to fund operations to explore, develop and
produce petroleum within a concession area, under an Oil Prospecting License and for an
agreed number of years. If the effort is successful, the company will be subject to pay
Petroleum Profit Tax (PPT), Royalty and other bonuses/levies to the Government. The
company is entitled to recover its costs, in-kind, through 'Cost Oil'.
The company also pays PPT and Royalty in-kind, through the NNPC’s arrangement of lifting
of crude oil and gas for Tax, Royalty and share of Profit oil (usually shared in a pre-
determined ratio), for sale and remittance to designated accounts. The account could be FIRS
(Tax) account or DPR account (Royalty) while proceeds from the sale of profit oil is remitted
directly to the Federation Account. PSC frees the Government from financial burden since the
company bears cost of exploration and production.
In 2021, 12 of the PSC blocks made production while 17 blocks did not produce. There were
also 6 inactive blocks. Tables 14,15 and 16 below show companies under each category.
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Table 14 - Producing PSC Blocks

S/N CONTRACTOR OPL/(OML) Date of Expiry
First Oil Date
1 Addax Petroleum Development (Nigeria) Limited – (Antan) OPLs 98/118 (OMLs 123/124) 1998 2028
2 Nigerian Agip Exploration (Nigeria) Limited - (Abo) OPL 316 (OML125) 2003 2023
3 Addax Petroleum Exploration (Nigeria) Limited – (Okwori) OPLs 90/225 (OMLs 126/137) 2005 2028
4 Shell Nigeria Exploration and Production Company – (Bonga) OPL 212 (OML 118) 2005 2023
5 Esso Exploration and Production Nigeria Limited (Erha) OPL 209 (OML 133) 2006 2023
6 Star Deep Water Petroleum Limited – (Agbami Unit) OPLs 216/217 (OMLs 127/128) 2008 2038
7 Total Upstream Nigeria Limited (Akpo) OPL 246(OML 130) 2009 2025
8 Sterling Global Oil Resources Limited – (Okwuibome) OPL 280 (143) 2012 2032
9 Esso Exploration and Production Nigeria Limted (Usan) OPL 222 (OML 138) 2012 2036
10 Enageed Resources Limited OPL 274 (Unit Area) (OML 148) 2017 2035
11 Sterling Global Oil Resources Limited – (Agu) OPL 277 (OML 146) 2018 2031
12 Pan Ocean Oil Corporation – (Obi Anyima) OPL 275 (OML 147) 2019 2033
Table 15 - Non-Producing PSC Blocks

S/N CONTRACTOR OPL/(OML) Date of Expiry
First Oil Date
1 Esso E & P (Deep Water West) Limited OPL 221 (OML 139) 2003 2033
2 Esso E & P (Deep Water West) Limited OPL 223 (OML 154) 2004 2034
3 Nigerian Agip Exploration (NAE) OML 134 (OPL 211) 1993 2023
4 Shell Nigeria Exploration and Production Company (SNEPCO) OML 135 (OPL 219) 1993 2023
5 Texaco Nigeria Outer Shelf Limited (TNOS) OML 132 (OPL 213) 1993 2023
6 Star Deep Water Petroleum Limited OML 140 2004 2034
7 Esso E & P (Deep Water West) Limited OML 145 (OPL 214) 2002 2032
8 Statoil Nigeria Limited OML 129 (OPL 218) 1993 2023
9 NewCross Petroleum Limited OPL 283 2010 2035
10 Sahara Energy Exploration and Production Limieted (SEEPL) OPL 284 2007 2033
11 Conoil Producing Limited OML 153 (OPL 290) 2008 2033
12 Continental Oil and Gas Limited OML 1so (OPL 2007) 2008 2033
13 Enageed Resources Limited OPL 274 2008 2035
14 Nig-Del United Oil company Limited OPL 223 2007 2020
15 Sterling Oil Exploration & Energy Production Co. Limited OPL 2004 2016 2041
Table 16 - Inactive Producing PSC Blocks

S/N CONTRACTOR OPL/(OML) Contract
Year
1 GEC Petroleum Development Company Limited (GPDC) OPL 2009 2008

2 GEC Petroleum Development Company Limited (GPDC) OPL 2010 2008
3 Nigerian Agip Oil Company (NAOC) OPL 135 2006
4 Nigerian Agip Oil Company (NAOC) OPL 282 2006
5 Monipulo Limited OPL 231 2011
6 Esso Exploration and Production Limited OPL 226 2006
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Other Commercial Arrangements
• Service Contracts
NNPC had a service contract for petroleum operations with Agip Energy and Natural
Resources (Nigeria) Limited (AENR) on OML 116. Under the contract, AENR was a purely
technical contractor with no equity interest in the assets and outputs of operation.
However, the service contract was terminated in 2019 and the operatorship of OML 116
was subsequently transferred to NPDC on purely technical basis to operate on behalf of the
Federation.
• Carry Agreements or Alternative Funding Agreements

The government of Nigeria introduced the carry funding agreements in 2008 where the
operators finance the Federation’s participating interest shares of agreed development
costs of certain projects under certain terms and conditions. The carried party reimburses
the operator in kind.
Table 17- Carry Agreements Between Federation (NAPIMS) and Some of its
Partners in The JOAs
S/N Carry Party Federation Interests Projects
1 Total E&P Nigeria Limited (TEPNG) 60% Development of Amenam/kpono

2 Chevron Nigeria Limited 60% North Swamp
3 Chevron Nigeria Limited 60% South Offshore Water Injection Project (SOWIP)
Modified Carry Agreement (MCA)

Under the agreements, the carried party is NNPC. NNPC’s share of project development
expenditures based on its participating interest are reimbursed to the carrying parties, by
means of Carry Tax Relief (CTR) and Carry Oil, amongst other terms. The existing MCA
projects are as follows:
◦ Gbaran- Ubie Phase 2A
◦ Ofon 2
◦ OML 58
◦ Oso Condensate
◦ Gbaran-Ubie Phase 1
◦ 2007-2009 Drilling Bundle
◦ 2010 Drilling Bundle
Outlook of Other Key Projects by NNPC and Partners

A summary of key projects NNPC is currently implementing with its partners is presented
below. Details including a description of each project, the scope of implementation and the
time frame can be found here.
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Table 18 - Outlook of Other Key Projects by NNPC and Partners

S/N Project Name Contract Type Lease/OML Partner/Operator
1 Bonga North PSC 118 SNEPCO

2 Bonga SouthWest-Aparo (BSWAP) PSC 118 SNEPCO
3 Bonga New Oil Campaign PSC 118 SNEPCo
4 Bolia-Chota, Nnwa-Doro & Ngolo PSC 131/135
5 Owowo Development PSC 154 ESSO
6 Bosi Development PSC 133 ESSO
7 Agbami Gas Monetization PSC 127/128 Stardeep
8 Preowei Development PSC 130 TUPNI
9 ANOH Gas Development JV 21/53 SPDC
10 Ubeta Gas Development JV 58 TEPNG
11 Project Panther JV OMLs 49, 90, 91 & 95 CNL
12 Agbami Rev 5 FDP Infill Drilling PSC 127/128 STARDEEP
13 Madu Development JV 85 First E&P
2.7. Observations, Findings and Recommendations

The following were the observations on Production from PSC Blocks In 2021:
1. Only 12 (34%) of the PSC blocks recorded production, while 23 other blocks,
representing 66% of total numbers of PSC blocks did not produce.
2. Total production from the PSCs, which was 242.96 million barrels represents 42.92%
of total production of the 566.13 million barrels.
3. According to the Commission’s regulation, all successful applicants whose names are
in the Notice of Preferred Bidder Status ought to have made payment of signature
bonus, prior to award, however, the list of awardees contained names of companies
that had not made payment of signature bonus. Four companies whose names were
not on the list of awardees also made payment of signature bonus for 2020/2021
marginal fields award.
4. Section 64C and 9 (4) of the PIA provides for 30% deduction from profit oil and profit
gas by NNPCL for frontier exploration fund and NNPCL management fee, but does not
provide clarification as to what percentage goes for frontier exploration fund and
NNPCL management fee.
5. Section 54(1) of the PIA, 2021 provides that the Minister of Petroleum and the
Minister of Finance shall within 18 months of the effective date of the PIA identify and
transfer assets, interests and liabilities of NNPC to NNPCL. However, this provision of
the PIA has not been effected, but NNPCL has taken over all the Federation assets in the
JVs and operate as a business entity.
Implication:
1. The PSC arrangements, which contributed highest to the total production volumes
operated only 34% of the total allocated blocks.
2. Award of marginal fields prior to payment of signature bonus as well as payment of
signature bonus by companies that did not participate in the process by NUPRC
indicates that the Commission did not adhere to it own regulations.
3. The amount due to the frontier exploration fund from PSC operations is not clear .
4. The equity crude proceeds, which constitute major source of revenue to the
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Federation prior to PIA, will no longer flow to the Federation.
Recommendations
1. There is the need for NUPRC, and NNPC Ltd. speedily review the technical, operational
and other constraints limiting production from the idle PSC blocks with the view of
optimising production from the PSC arrangements. Where these issues cannot be
resolved, consider revocation of licenses and subsequent allocation to other interested
parties.
2. The NUPRC should adhere strictly to all its regulations.
3. There is the need to review PIA to:
▪ Clarify Terminology and Deductions: To address the ambiguity surrounding the
allocation of 30% for both the management fee and the FEF, the PIA should provide
clear and precise definitions of terms like "profit oil" and the "management fee."
This will eliminate confusion and ensure consistent application across relevant
Sections of the law.
▪ Review and Streamline Deductions: The federal government should consider
reviewing the deductions from profit oil to ensure they are clearly delineated. If the
intention is to have one 30% retention that covers both the management fee and the
FEF, the wording should be rephrased to reflect this clearly. Alternatively, if
separate 30% retentions are required, the language should be revised accordingly.
4. The Minister of Petroleum and Minister of Finance should determine the assets,
interests and liabilities to be transferred to NNPCL and and what remains with NNPC
in accordance with Section 54 (1) of the PIA.
NNPC response:
PSC blocks transit from exploration/appraisal phase to production overtime. Also note that
some of the blocks are still at award status as some contractors may not have come forward
for budget/work program due to various reasons from regulatory to business operations’
considerations. We are hopeful that about 2-3 blocks will soon attain production status.
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THREE
EXPLORATION, PRODUCTION AND EXPORT
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THREE
EXPLORATION, PRODUCTION AND EXPORT
Oil exploration and field development in Nigeria commenced in 1937 and has made
continuous progress over the years. The oil and gas value chain encompasses Exploration and
Production (E&P) of oil and gas, transportation, and storage, refining and marketing of oil,
processing, and marketing of gas, as well as related activities such as oilfield services and
petrochemicals.
3.1. Exploration
Exploration involves the process of searching for hydrocarbon resources beneath the earth’s
surface using technological processes such as acquiring seismic data and drilling of
exploration wells. The details of NNPC frontier exploration services activities between 2020
and 2022 can be found here.
According to OPEC 2021 data published in OPEC Annual Statistical Bulletin 2022, Nigeria
proven crude oil reserves in 2021 was 37.05 (Billion Barrels), maintaining second largest
(behind Libya) oil reserves in the African region. This is an increase of about 4% of 2020 data
(36.91 billion barrels). Nigeria maintains the largest gas reserves of about 5.85 billion cubic
meters of gas in the African region, a marginal increase of about 2% of 2020 data (5.75
billion cubic meters.). Some of the major players in exploration and production activities in
Nigeria include the NNPC, Royal Dutch Shell Plc, Total Energies Nigeria, Chevron
Corporation and Exxon Mobil Corporation.
3.2. Production and Exports
Production as defined by NUPRC and in accordance with the law is “the safe withdrawal of
hydrocarbon from the subsurface in accordance with technical and conservation
considerations so as to minimize waste and ensure optimum recovery”. The nation's
production is typically measured in barrels (volume) and barrels of oil per day (rate) in the
case of oil and million standard cubic feet per day (rate) or million standard cubic feet
(volume) in the case of gas.
NUPRC is responsible for the regulation and monitoring of oil and gas activities from
exploration, through production and exports from the terminals. The Figure below shows the
major field operation activities between exploration, production and export.
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Figure 7 - Flow of Production to Exports

Petroleum
Industry
Acreage Allocation
Major Operational Facility Type

Downstream Flow-stations
Upstream
Production Platforms
FPSO
Upstream Gas Plant
Flow-lines, Risers, Pipelines, SPS

Exploration & Production Oil & Gas Processing
Activities
Major Operations
Survey Activities
Exploration & Appraisal
Drilling & Completion
Operational Facility Oil & Gas Terminal
Operations
Export
Export Buoy Oil & Gas Pipelines Systems

Lines
Oil & Gas Processing Major Operations

Stabilization of oil and gas for export
Bulk Storage of crude for export
Source: NUPRC
Fiscalization of export parcels
Production Arrangements
Production in the year was carried out under the Joint Venture ( JV) arrangement, Production
Sharing Contract (PSC), Sole Risk (SR), Service Contract (SC), and the Marginal Fields (MF).
Production was also recorded through the Modified Carried Agreement (MCA) and
Repayment Agreements which was structured for offsetting Cash-Call legacy liabilities. See
figure 3 for a full description of all the arrangements.
Joint Development Zone (JDZ)

In addition to the national production arrangements mentioned above, Nigeria also operates
a unitized zone with Sao Tome and Principe referred to as the JDZ. The zone lies
approximately 200km offshore Nigeria, where large petroleum discoveries have been made.
There has been a bilateral treaty between the two countries since 2001 to administer
production from the zone, through the institution of the Joint Development Authority ( JDA).
There were no exploration or production activities in 2021. However, there were three
revenues recorded by the Authority in the year 2021. These were License Fee & Acreage
Rental, Value Added Tax and Withholding Tax. See Appendix 7 for more details.
3.2.1. Crude Oil Production and Exports
The total volumes of oil and gas production for 2021 were extracted from the NMDPRA Sign-
off documents. This document is signed by the production company, NMDPRA and NNPC
following the yearly reconciliation of production figures. The figures were also reconciled
with the companies during the course of the audit. For year 2021, 54 companies produced
crude oil resulting in a total metered production of 634.60million barrels, however,
68.47million barrels was lost to production adjustment, measurement error and
theft/sabotage, leaving a balance of 566.13 million barrels as fiscalised production for 2021.
The fiscalised production includes both crude oil and condensates. The reconciled
production data is however at variance with publicly disclosed data on NUPRC website. The
Table below shows the reconciled crude oil production analysis by companies.
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Table 19 – 2021 Crude Oil Production by Companies

Company Metered Losses Fiscalized
Production production
at Flow Production Measurement Theft/
Station adjustment error sabotage
NAE 6,006,933 (528) - - 6,006,405

SPDC 74,217,878 - (14,025,443) (10,423,979) 49,768,456
EXCEL E&P 337,084 - (2,143) (26,607) 308,334
NPDC/SEPLAT JV 15,438,174 - - (1,631,740) 13,806,434
PANOCEAN 888,816 - - (94,797) 794,019
NPDC/NECONDE JV 8,839,478 - (11,214) (66,685) 8,761,579
NPDC/FHN JV (OML 26) 3,198,427 - (5,227) (353,334) 2,839,866
NPDC (OML 98) 610,787 - - (65,642) 545,145
NPDC (OML 111) 3,700,924 - - (387,877) 3,313,047
NPDC (OML65-ABURA) 2,248,707 - (22,219) (237,098) 1,989,390
NPDC/ND WESTERN JV (OML 34) 6,010,865 - (57,600) (655,454) 5,297,811
NPDC/SHORELINE JV (OML 30) 8,736,682 - (56,234) (852,540) 7,827,908
NPDC/ELCREST JV (OML 40) 4,788,213 - (240,217) (383,798) 4,164,198
MIDWESTERN 2,866,413 - (451) (272,753) 2,593,209
ENERGIA 1,256,801 - (210) (120,168) 1,136,423
PILLAR OIL 875,584 - (8,070) (75,520) 791,994
CHORUS 189,194 - (12) (18,617) 170,565
PLATFORM 828,533 - (212) (73,526) 754,795
CHEVRON 60,668,290 (361) - - 60,667,929
STARDEEP 44,591,730 - - - 44,591,730
TUPNI 89,192,403 - - - 89,192,403
APDNL 6,393,025 - (2,191) (124,594) 6,266,240
APENL 1,282,171 - - - 1,282,171
MONI PULO 644,957 - - - 644,957
FIRST E&P 10,785,471 - - - 10,785,471
SNEPCO 38,348,722 - - - 38,348,722
NAOC 15,245,414 - (31,887) (1,235,009) 13,978,518
NPDC 5,171,168 62,330 (1,608) (92,669) 5,139,221
SEPLAT 2,874,964 - (64,002) (1,069,914) 1,741,048
ESSO E&P 21,597,725 - - - 21,597,725
CONOIL 243,630 - - - 243,630
CONTINENTAL OIL 5,117,972 (1,219) 5,116,753
DUBRI 22,901 - - - 22,901
TEPNG 31,977,465 - (74,546) (3,398,270) 28,504,649
AMNI 3,940,642 923 - - 3,941,565
GREEN ENERGY 1,589,941 (4,923) - - 1,585,018
MOBIL 64,602,388 186,639 - - 64,789,027
FRONTIER 420,354 (13,083) - - 407,272
UNIVERSAL 919,234 (60,495) - - 858,739
NETWORK E&P 578,603 (45,802) - - 532,801
ALL GRACE 318,924 - - - 318,924
ESSO E&P (0E) 15,644,271 - - - 15,644,271
BELEMA 2,328,417 - (75,515) (1,337,173) 915,728
NDPR 2,962,195 - (2,395) (1,462,845) 1,496,955
EROTON 7,039,369 - (3,750,120) (1,732,602) 1,556,647
AITEO 13,941,368 - (8,370,373) (2,760,907) 2,810,088
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Company Metered Losses Fiscalized

Production production
at Flow Production Measurement Theft/
Station adjustment error sabotage
NEWCROSS E&P 8,640,346 - (235,199) (5,173,679) 3,231,468

HEIRS HOLDINGS 10,893,862 - (3,997,838) (3,205,072) 3,690,953
WALTERSMITH 1,320,447 - (9,078) (234,047) 1,077,322
STERLING GLOBAL 3,370,526 - - - 3,370,526
STERLING EXPLORATION 15,862,333 - - - 15,862,333
YINKA FOLAWIYO 394,361 14,037 - - 408,398
BRITTANIA-U 450,830 - - - 450,830
ORIENTAL 4,187,425 - - 4,187,425
Total 634,603,337 137,518 (31,044,004) (37,566,916) 566,129,936
Source: NEITI 2021 Audit Template, 2021 NMDPRA Reconciliation Sign-off Report
The total fiscalised crude oil production for 2021 was 566.13 million barrels. This is a 12%
reduction from the volume produced in 2020, which was 646.79million barrels. The
production disaggregation by project level can be found in Appendix 8. The Table below
compares the fiscalised production volume by production arrangement for the years 2020
and 2021.
Table 20 – Comparism of 2021 and 2020 Fiscalised Crude Oil Production

by Arrangements
Description 2021 2020 Change
mbbls mbbls %
Joint Venture ( JV) - Includes MCA and RA 225,230.00 271,418.16 -17%
Production Sharing Contract (PSC) 242,956.55 253,781.76 -4%
Service Contract (SC) 978.89 1,099.73 -11%
Sole Risk (SR) 80,293.90 99,839.56 -19%
Marginal Field (MF) 6,670.61 20,648.23 -19%
Total Production 566,129.94 646,787.44 -12%
Source: NEITI 2021 Audit Template, 2021 NMDPRA Reconciliation Sign-off Report & NEITI 2020 Audit Report
Figure 8: A Five-Year Trend of Crude Oil Production in Nigeria (2017 - 2021)
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The production figure of 566.13million barrels in 2021 was the lowest when compared with
the figures recorded in the previous four years. This is followed by the year 2020 with a
production figure of 647million barrels, while 2019 had the highest production figure of
735.24million barrels.
Table 21 - 2021 Percentage Contribution to Crude Oil Production
Year Total Average JV RA MCA PSC SC SR MF
Production Production
Per day
mbbls mbbls mbbls mbbls mbbls mbbls mbbls mbbls mbbls
2021 566,129.94 1551.04 181,794.85 16,771.10 26,664.05 242,956.55 978.89 80,293.90 16,670.61
Percentage Contribution 32.11% 2.96% 4.71% 42.92% 0.17% 14.18% 2.94%
Source: NEITI 2021 Audit Template, 2021 NMDPRA Reconciliation signed-off Report
From Table 21 above, the PSC arrangement was the largest contributor to total crude
production for the year 2021 (242.96million barrels), accounting for up to 42.92%. The JV
arrangement contributed 32.11% (181.79million barrels) while sole risk contributed
14.18% (80.29million barrels). Additionally, MCA contributed 4.71% (26.67million
barrels), RA was 2.96% (16.77million barrels) marginal field was 2.94% (16.67million
barrels), and Service Contract was 0.17% (0.98 million barrels).
Table 22 - Fiscalised Crude Oil Production by Terminal, Stream and Percentage

Contribution
2021 Ranking
Terminal Terminal Streams 2021 2020 Year-on

Operator (Crude -Year Change
Type)
Annual Contribution Annual Contribution
Total Total
mbbls % mbbls % %
('000) ('000)
a b c = (a-b)/b
*100
1 Forcados SPDC Forcados Blend 71,083.79 12.56% 85,671.34 13.25% -17.03%

2 Escravos Chevron Escravos Blend 59,045.51 10.43% 54,774.19 8.47% 7.80%
3 Egina TUPNI Egina 57,591.79 10.17% 56,374.02 8.72% 2.16%
4 QIT Mobil Qua Ibo Light 56,579.60 9.99% 68,592.99 10.61% -17.51%
5 Agbami Star Deep Agbami 44,591.73 7.88% 52,450.33 8.11% -14.98%
6 Bonga SNEPCO Bonga 38,348.72 6.77% 43,007.05 6.65% -10.83%
7 Bonny SPDC Bonny Light 35,502.97 6.27% 73,423.94 11.35% -51.65%
8 Akpo TUPNI Akpo 31,600.62 5.58% 35,603.96 5.50% -11.24%
9 Odudu TEPNG Amenam Blend 25,013.43 4.42% 28,803.65 4.45% -13.16%
10 Erha Mobil Erha 21,597.73 3.81% 23,602.85 3.65% -8.50%
11 Brass NAOC Brass Blend 19,512.40 3.45% 32,231.85 4.98% -39.46%
12 Tulja SEEPCO / SGORL Okwibome 19,232.86 3.40% 13,224.35 2.04% 45.44%
13 Usan Mobil Usan 15,644.27 2.76% 13,612.31 2.10% 14.93%
14 Anyala Madu First E&P CJ Blend 10,785.47 1.91% 722.05 0.11% 1393.73%
15 Yoho Mobil Yoho 10,008.24 1.77% 9,201.33 1.42% 8.77%
16 Ugo Neconde Ugo Ocha 8,160.10 1.44% 9,637.47 1.49% -15.33%
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2021 Ranking
Terminal Terminal Streams 2021 2020 Year-on

Operator (Crude -Year Change
Type)
Annual Contribution Annual Contribution
Total Total
mbbls % mbbls % %
('000) ('000)
a b c = (a-b)/b
*100
17 Pennington Chevron Pennington Light 7,005.70 1.24% 4,290.22 0.66% 63.29%

18 EA (Sea Eagle) SPDC EA 6,906.46 1.22% 9,541.83 1.48% -27.62%
19 Abo NAE Abo 6,006.41 1.06% 5,793.19 0.90% 3.68%
20 Antan Addax Antan Blend 5,577.49 0.99% 6,172.00 0.95% -9.63%
21 Ebok Oriental Energy Ebok 4,187.43 0.74% 4,711.79 0.73% -11.13%
22 Okono NPDC Okono 4,160.33 0.73% 4,987.62 0.77% -16.59%
23 Okoro Amni Okoro 3,941.57 0.70% 5,433.23 0.84% -27.45%
24 Otakikpo Green Energy Otakikpo 1,585.02 0.28% 1,834.49 0.28% -13.60%
25 Okwori Addax Okwori Blend 1,282.17 0.23% 1,429.38 0.22% -10.30%
26 Ajapa Brittania- U Ajapa 450.83 0.08% 596.35 0.09% -24.40%
27 Aje Yinka Folawiyo Aje 408.40 0.07% 689.10 0.11% -40.73%
28 Ubima All Grace Ubima Blend 318.92 0.06% 374.57 0.06% -14.86%
TOTAL 566,129.94 100.00% 646,787.43 100.00% -12.47%
Source: NEITI 2020 Audit Report, NEITI 2021 Audit Template and 2021 NMDPRA Reconciliation signed-off Report
Forcados terminal operated by SPDC had the highest percentage of contribution to total
crude production in 2021 with production figures of 71,083.79mbbls amounting to
12.56%. This is followed by Escravos terminal with production volume of 59,045.51mbbls
amounting to 10.43% of total crude production for the year. Egina Terminal operated by
Tupni contributed 10.17% (57,591.79mbbls). The remaining terminals each contributed
less than 10% of the total production with Atan, Ebok, Okoro, Okono, Otakikpo, Okwori, Aje,
Ajapa and Ubima producing less than 1% each.
3.2.1.1. Federation Entitlement to Crude Production from JV Arrangement
The Federation, through the NNPC, is entitled to share of crude in the JV production
arrangements. This share is based on equity participation and the contract entered into by the
NNPC with the producing companies. The total crude entitlement to the Federation from JV
productions was 132.25 million barrels in 2021. Of this amount, Mobil JV was the largest
contributor with 38.87 million barrels, while Belema Oil JV contributed the least with 0.55
million barrels. The Table below shows Federation entitlement from JV production
arrangement including companies shares.
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Table 23 - Federation Entitlement from JV Production Arrangement

TOTAL PRODUCTION NNPC NNPC SHARE COMPANY COMPANY SHARE
EQUITY EQUITY
mbbls mbbls % mbbls % mbbls mbbls
2021 2020 2021 2020 2021 2020
AITEO 2,810.09 9,637.53 55% 1,545.55 5,300.64 45% 1,264.54 4,336.89

BELEMA 915.73 1,913.29 60% 549.44 1,147.97 40% 366.29 765.32
CHEVRON 60,667.93 55,816.14 60% 36,400.76 33,489.68 40% 24,267.17 22,326.46
EROTON 1,556.65 7,624.21 55% 856.16 4,193.32 45% 700.49 3,430.89
FIRST E&P 10,785.47 722.05 60% 6,471.28 433.23 40% 4,314.19 288.82
HEIRS HOLDING 3,690.95 - 55% 2,030.02 - 45% 1,660.93 -
MOBIL 64,789.03 76,119.30 60% 38,873.42 45,671.58 40% 25,915.61 30,447.72
NAOC - 5,328.85 60% - 3,197.31 40% - 2,131.54
SEPLAT 1,741.05 2,066.59 60% 1,044.63 1,239.96 40% 696.42 826.64
SPDC 49,768.46 77,321.30 55% 27,372.65 42,526.72 45% 22,395.81 34,794.59
TEPNG 28,504.65 34,868.88 60% 17,102.79 20,921.33 40% 11,401.86 13,947.55
GRAND TOTAL 225,230.00 271,418.14 132,246.69 158,121.73 92,983.31 113,296.41
Source: NEITI 2020 Audit Report, NEITI 2021 Audit Template and 2021 NMDPRA Reconciliation signed-off Report
3.2.1.2. Crude Oil Losses and Deferment
Crude oil losses occur as a result of theft, sabotage and/or metering error, which lead to a
reduction in the volume of fiscalised crude production for a period of time. Deferment on the
other hand, is the stoppage in production as a result of scheduled and unscheduled repairs
and maintenances or pipeline breaks/leaks, poor equipment performance etc. The Table
below compares fiscalised production as well as the unilaterally disclosed crude oil losses
suffered by some companies in 2021. A total 29 companies suffered crude losses from theft
and sabotage amounting to 37.57 million barrels.
Table 24- Crude Oil Losses

S/N COMPANY Metering Metering % of Theft/ % of Fiscalization % of Fiscalized
Production Error Metering Shortage Theft/ Production Production
at Flow Error To Shortage to Metered
Station Metered to Metered Production
bbls bbls % bbls % bbls %

1 SPDC 74,217,878 14,025,443 19% 10,423,979 14% 49,768,456 67%
2 EXCEL 337,084 2,143 1% 26,607 8% 308,334 91%
3 NPDC/SEPLAT JV 15,438,174 - 0% 1,631,740 11% 13,806,434 89%
4 PANOCEAN 888,816 - 0% 94,797 11% 794,019 89%
5 NPDC/NECONDE JV 8,839,478 11,214 0% 66,685 1% 8,761,579 99%
6 NPDC/FHN JV (OML 26) 3,198,427 5,227 0% 353,334 11% 2,839,866 89%
7 NPDC (OML 98) 610,787 - 0% 65,642 11% 545,145 89%
8 NPDC (OML 111) 3,700,924 - 0% 387,877 10% 3,313,047 90%
9 NPDC(OML 65-ABURA) 2,248,707 22,219 1% 237,098 11% 1,989,390 88%
10 NPDC/ND WESTERN JV (OML 34) 6,010,865 57,600 1% 655,454 11% 5,297,811 88%
11 NPDC/SHORELINE JV (OML 30) 8,736,682 56,234 1% 852,540 10% 7,827,908 90%
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S/N COMPANY Metering Metering % of Theft/ % of Fiscalization % of Fiscalized

Production Error Metering Shortage Theft/ Production Production
at Flow Error To Shortage to Metered
Station Metered to Metered Production
bbls bbls % bbls % bbls %

12 NPDC/ELCREST JV(OML 40) 4,788,213 240,217 5% 383,798 8% 4,164,198 87%
13 MIDWESTERN 2,866,413 451 0% 272,753 10% 2,593,209 90%
14 ENERGIA 1,256,801 210 0% 120,168 10% 1,136,423 90%
15 PILLAR OIL 875,584 8,070 1% 75,520 9% 791,994 90%
16 CHORUS 189,194 12 0% 18,617 10% 170,565 90%
17 PLATFORM 828,533 212 0% 73,526 9% 754,795 91%
18 APDNL 6,393,025 2,191 0% 124,594 2% 6,266,240 98%
19 NAOC 15,245,414 31,887 0% 1,235,009 8% 13,978,518 92%
20 NPDC 5,171,168 1,608 0% 92,669 2% 5,076,891 98%
21 SEPLAT 2,874,964 64,002 2% 1,069,914 37% 1,741,048 61%
22 TEPNG 31,977,465 74,546 0% 3,398,270 11% 28,504,649 89%
23 BELEMA 2,328,417 75,515 3% 1,337,173 57% 915,729 39%
24 NDPR 2,962,195 2,395 0% 1,462,845 49% 1,496,955 51%
25 EROTON 7,039,369 3,750,120 53% 1,732,602 25% 1,556,647 22%
26 AITEO 13,941,368 8,370,373 60% 2,760,907 20% 2,810,088 20%
27 NEWCROSS 8,640,346 235,199 3% 5,173,679 60% 3,231,468 37%
28 HEIRS HOLDING 10,893,862 3,997,838 37% 3,205,072 29% 3,690,952 34%
29 WALTERSMITH 1,320,447 9,078 1% 234,047 18% 1,077,322 82%
TOTAL 243,820,600 31,044,004 13% 37,566,916 15% 175,209,680 72%
Source: NEITI 2021 Audit Template and 2021 NMDPRA Reconciliation signed-off Report
The Table above reflects that total production in 2021 as per Table 19 could have been higher
by 37.57million barrels without the theft and sabotage. Usually, crude losses are suffered by
companies that transport their products through pipelines where it is susceptible to sabotage.
The metering error of over 13% of actual metered production calls for concern.
Table 25 - Crude Theft by Terminal

Terminal Metered production at Theft/sabotage Percentage
flow station
FORCADOS 80,990,093 7,118,427 9%
BRASS 21,260,081 1,539,204 7%
BONNY 92,459,908 28,909,285 31%
TOTAL 194,710,082 37,566,916 19%
Source: NEITI 2021 Audit Template and 2021 NMDPRA Reconciliation signed-off Report
From the Table above, theft and sabotage occurred in three terminals, namely Forcados, Brass
and Bonny with Bonny having the highest volume of theft (28.91 million barrels) accounting
for 31% of metered production into the terminal. This is followed by Forcados which
experienced theft in the volume of 7.12 million barrels amounting to 9% of metered
production into Forcados. Brass Terminal had the least volume of theft with 1.54 million
barrels amounting to 7% of metered production, although production stopped in some fields
in May. Cumulatively, a total of 37.57 million barrels of crude oil was lost to theft and
sabotage in 2021, making 19% of production delivered into Bonny, Brass and Forcados
Terminals.
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Figure 9 - A five-year trend of crude oil Losses in Nigeria (2017 - 2021)
Figure 10 above shows a five year trend of crude losses. The drop in crude oil losses due to
theft and sabotage between 2020 and 2021 is generally due to the decline in crude oil
production during this period.
Total Deferred crude production for 2021 unilaterally disclosed by companies was 70.09
million barrels. This is 3.5% higher than the previous years’ deferred crude production of
72.70 million barrels. A total of 28 companies populated the deferred production template
with Shell Petroleum Development Company having the highest contribution (23.16%) and
Conoil having the least contribution (0.06%). The major reason stated as the cause of
deferred production was repairs and maintenance.
Table 26 - 2021 Crude Oil Production Deferments

RANKING COMPANY DEFERRED PRODUCTION BBLS CONTRIBUTION %
SPDC 16,233,915 23.16%
2 NAOC 6,954,155 9.92%
3 SEPLAT 6,339,085 9.04%
4 AITEO 6,293,742 8.98%
5 CHEVERON 6,047,755 8.63%
6 NPDC/ND WESTERN JV 5,201,150 7.42%
7 TEPNG 3,050,877 4.35%
8 NPDC ABURA 2,971,222 4.24%
9 NPDC-FHN 2,831,046 4.04%
10 CONTINENTAL OIL 2,167,301 3.09%
11 NPDC (OML 111) 1,980,291 2.83%
12 APENL 1,636,699 2.34%
13 NPDC 1,376,090 1.96%
14 APDNL 1,129,909 1.61%
15 SNEPCO 1,078,504 1.54%
16 ENERGIA 741,364 1.06%
17 ENAGEED 727,506 1.04%
18 PILLAR OIL 579,098 0.83%
19 HEIRS HOLDINGS 559,988 0.80%
20 PLATFORM 434,527 0.62%
21 ORIENTAL 320,277 0.46%
22 NPDC (OML 40) 311,486 0.44%
23 NPDC (OML 119) 310,000 0.44%
24 GREEN ENERGY 265,486 0.38%
25 BELEMA 237,189 0.34%
26 ALL GRACE ENERGY 215,572 0.31%
27 CHORUS 49,280 0.07%
28 CONOIL 45,260 0.06%
TOTAL 70,088,774 100.00%
3.2.1.3. Crude Oil Lifting
Lifting is the process of taking crude oil out of quantities produced for the purpose of export
or domestic utilisation. Lifting occurs at the various crude oil terminals by companies and by
the NNPC, on behalf of the Federation. Lifting by the NNPC is categorised into federation
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volumes for export, federation volumes for domestic utilisation and NPDC volumes.
Total crude lifting for the year was 551.01 million barrels. This was 15% lower than the
volume lifted in 2020.
Table 27 -Total Crude Oil Lifting

Description 2021 2020 Change
mbbls mbbls %
Opening stock 12,588.34 16,709.42 -24.66%
Total production for the year 566,129.94 644,362.56 -12.14%
Total stock available for lifting (A) 578,718.28 661,071.98 -12.46%
NNPC Lifting
Export Lifting:
* Joint Venture operator 30,112.85 56,719.76 -46.91%
Production Sharing Contract 51,278.18 60,539.69 -15.22%
Marginal Field Operators 160.00 230.00 -30.43%
Service Contract 1,547.54 100.00 1447.54%
Subtotal - Export - (B) 83,145.57 117,589.45 -29.29%
Domestic Lifting (Refinery & DSDP)

*Joint Venture 98,768.23 103,941.87 -4.98%
Production Sharing Contract - 3,744.45 -100.00%
Marginal Field 180.00 60.00 166.67%
Subtotal -Refinery & DSDP - (C) 98,948.23 107,746.33 -8.18%
Total - NNPC Lifting - (D= B + C) 182,093.80 225,335.78 -19.20%
Company Lifting
Joint Venture 88,240.24 117,793.03 -25.09%
Production Sharing Contract 191,592.98 191,892.21 -0.16%
Sole Risk 71,427.33 94,801.40 -24.66%
Marginal Field 17,651.83 18,661.22 -5.30%
Total- Company Lifting- (E) 368,912.38 423,147.86 -12.81%
Total Crude Oil lifting - (F= D + E) 551,006.18 648,483.64 -15.03%
Closing stock - (G = A - F) 27,712.10 12,588.34 120.14%

Source: NEITI 2021 Templates and NNPC-COMD Annual Production Report
*Included in the lifting by NNPC from JV is 21,090 million barrels lifted for alternative
funding arrangement (AF).
As Shown on the Table above, the Federation through the NNPC lifted a total of 182.09
million barrels while companies lifted 368.91 million barrels.
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Figure 10 - Five Year Trend of Crude Oil Lifting
Table - Total Crude Oil Lifting by Arrangements

Production Arrangements Parties BBLS
Joint Venture NNPC 107,790,536

Companies 88,240,244
AF (carry/MCA/TPF) NNPC 21,090,550
Companies -
PSC NNPC 51,325,177
Independent NNPC -
Marginal Field NNPC 340,000
SC NNPC 1,547,543
Companies -
Total 551,006,186
Source: NEITI 2021 Templates and 2021 NMDPRA Reconciliation signed-off Report
Out of the 551.01million barrels of crude oil lifted in 2021, PSC arrangement had the
highest share of lifting with 242.92million barrels followed by the JV arrangement with
196.03million barrels. Service contract had the lowest share of 1.55million barrels. See
Appendix 9 for crude lifting by companies.
Crude Oil Lifting and Sales by NNPC

The NNPC manages the sales of Federation share of crude oil production. Federation crude
oil and gas are broadly classified into export and domestic, which are lifted and marketed by
the NNPC at international market prices. The buyers are selected through a competitive
bidding process. Also, the NNPC manages the lifting and sales of crude oil on behalf of NUPRC
and FIRS in settlement of Royalty and Taxes respectively for NNPC’s Production Sharing
Contractors, Service Contractors and JV Alternative Funding (AF) arrangements. These
liftings are regarded as in-kind payments under the Production Sharing Contracts (PSCs)
Service Contract (SC) and JV Alternative Funding (AF) arrangements.
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Productions Volumes are allocated between the Companies and NNPC.

a. Companies’ Entitlement: - Crude oil production volumes are allocated to the
Producing Company/other Companies within a peculiar arrangement. Hence, Crude
Oil Production and Lifting by the Company.
b. Federation Entitlement: - Crude oil production volumes are allocated to the NNPC
(Federation) and Related Government Agencies/Alternative Funding Partners. Hence,
Crude Oil Production and Lifting by NNPC.
Upon Sales of Crude Oil, NNPC advises the customers/off-takers to remit directly into the
Related Party’s Accounts.
a. For Lifting and Sales of Crude Oil due to the Federation from JV Equity, profit oil and
overriding royalty from Marginal field, Customers remit to the respective JV proceeds
accounts and NNPC-CBN JP Morgan Chase Crude Oil & Gas Revenue Account
respectively.
b. For Lifting and Sales of Crude Oil due to the Federal Inland Revenue Service (FIRS) and
Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Customers remit
directly to Related Agencies’ Designated Bank Accounts.
c. For Lifting and Sales of Crude Oil pledged to Entities for third Party Financing,
proceeds were accounted for through Escrow Accounts opened for that purpose and
funds are disbursed from the account for payment of the third-Party loan principal,
together with the related Interest and administrative expenses. Balance in the Escrow
Account (if any) is shared among the JV partners, in accordance with their respective
JV equity holding. In the case of MCAs, the Customers are advised to remit the sales
proceeds of the carry Oil and the partners’ share of profit to the related Entities
Designated Bank Account. Royalty and Taxes arising from MCAs operations are
remitted to the respective NUPRC and FIRS accounts, while NNPC share of profit
(Federation Equity share) is remitted to NNPC/CBN JP Morgan account.
Tendering Process for Crude Oil Sales

NNPC manages the tendering process for sales of the Federation equity share of crude oil
under the export category and the Direct Sales Direct Purchases (DSDP) under the domestic
crude category. The buyers of crude in the export category in 2021 were among the
international and indigenous companies selected in 2021 tendering process under a three-
year sales contract running from 2021 through 2023. Buyers under the DSDP arrangement
were selected in the 2021 tendering process for a three-year DSDP contract covering the
period between 2021 and 2023. See Appendix 10 for a list of 2021/2023 crude oil term
contract holders, DSDP contract holders and countries with bi-lateral agreement. See Section
3.2.1.3 of Appendix 24 for the description of the NNPC tendering process.
Pricing of Federation Crude Oil

The pricing and valuation was carried-out by the Crude Oil Marketing Division (COMD)
using the Official Selling Price (OSP) and average dated Brent depending on the pricing
options selected by the customers. The pricing options was either Prompt, Deferred or
Advanced. Each of these pricing options was based on average of five days Dated Brent
Quotation from the Bill of lading (B/L) date. Buyers get granted the right to choose one of the
three pricing options to determine the value of crude oil purchase from Nigeria irrespective
of the destination of the cargo around the world. However, where a buyer declined to choose
any of the pricing options, NNPC reserved the right to apply the Prompt Option price
automatically (by default) in determining the value of the crude oil cargo. See Appendix 11
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for details.
The derived annual average selling price of Federation equity crude oil in 2021 was
US$66.97/barrel. This is 61% higher than the average selling price in 2020 (US$41.65).
3.2.1.4. Sales Revenue Flows from NNPC Lifting
Revenue Flows from NNPC Crude Oil lifting are for the Account of various Parties such as
the NNPC-NAPIMS (Federation), Federal Inland Revenue Service (FIRS), Nigerian Upstream
Petroleum Regulatory Commission (NUPRC), JV Partners.
Summary of Export Crude Oil Sales and Receipts on behalf of the Federation
From the review of NNPC-COMD Populated Template and validation/reconciliation carried
out, find below the summary of Crude Oil export sales and receipts by NNPC-COMD on
behalf of the Federation.
Table 29 – Summary of crude oil Export Sales and Receipts on behalf

of the Federation
Crude oil export Sales volume (BBL) Sales Value ($) Sales Receipts Variance ($)
on behalf of ($)
Federation
Sales of Federation equity crude 5,178,002 334,946,907 325,937,940 9,008,968
oil export
Sales of profit oil (PSC) 400,000 28,987,000 21,173,600 7,813,400
Sales of crude from MF 160,000 10,916,200 9,374,944 1,541,256
Sales of profit oil (SC) 1,033,780 69,295,913 69,295,913 -
*Sales of TMP oil 3,844,301 259,634,515 259,634,515 -
**Sales of RA oil 14,219,937 999,705,694 867,256,485 132,449,209
Sub-total 2021 lifting 24,836,020 1,703,486,229 1,552,673,396 150,812,832
Crude export -Prior year 497,135.00 24,318,678.49 24,318,678 -
receivable
Grand Total 25,333,155 1,727,804,907 1,576,992,075 150,812,832
Sources: NEITI 2021 data template and NNPC-COMD lifting profile
* Sales of Trial Marketing Period (TMP) oil: This is the sale of Federation equity crude oil
derived from the market trial of a new crude oil type (Anyala madu) under a joint venture
arrangement between NNPC and First Exploration and Production Ltd, the Operator. The
sales value of $259.63million in the above Table was traced to TMP Escrow account jointly
operated by both parties. However, this amount was not swept to the Federation Account in
2021.
**Sales of RA oil: The lifting was for the repayment agreements with some JV Partners to
defray 2016 outstanding cash call. The sum of $867.26million was traced to the respective
escrow accounts jointly operated by NNPC and the respective JV Partners; from which the
repayments were made to the Partners. However, the sum of $132.45million could not be
confirmed to have been paid, as the relevant NAOC Escrow account was not provided by
NNPC for audit review.
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NNPC lifted total crude oil of 14.23million barrels valued at $999.71million in 2021 on
behalf of different parties. See Table 29 above and Appendix 12 for details.
As indicated in the Table above, NNPC lifted and exported a total of 24.84million barrels of
crude oil valued at $1.70billion on behalf of the Federation in 2021. The sum of $1.58billion
was traced to the respective bank accounts as the actual sales receipt in 2021, of which the
sum of $1.55billion represents 2021 sales receipts while the sum of $24.32million relates to
settlement of prior year receivables. The variance is analysed in the Table below.
Analysis of Variance
Revenue streams Not due for Credit note ($) Outstanding ($) Total ($)
payment ($)
Sales of Federation equity 2,231,550 3,884,538 2,892,880 9,008,968
crude oil export
Sales of profit oil (PSC) 7,813,400 - - 7,813,400
Sales of crude from MF - 1,541,256 - 1,541,256
Sales of RA oil 18,893,469 - 113,555,740 132,449,209
Total 28,938,419 5,425,794 116,448,620 150,812,832
From the above Table, the sum of $28.94million was not due for payment as of December
2021, while the sum of $5.43million accounted for credit note redeemed in 2021, the sum of
$116.45million was outstanding as of December 31, 2021.
Summary of Domestic Crude Oil Sales and Receipts on behalf of the Federation
out, find below the summary of Domestic Crude Oil sales and receipts by NNPC on behalf the
Federation.
Table 30 - Summary of Domestic Crude Oil Sales and Receipts on behalf

of the Federation
Domestic crude Sales volume Sales Value ($) Naira equivalent Sales Receipts (N) Variance (N)
(BBL) (N)
DSDP 94,224,905 6,786,580,791 2,606,296,720,707 1,644,087,407,357 1,085,930,647,231
PPMC Export 4,703,328 322,283,447 123,721,333,881
Sub-total: 2021 98,928,233 7,108,864,239 2,730,018,054,588 1,644,087,407,357 1,085,930,647,231
lifting
Domestic crude - 35,894,448 1,553,233,306 588,675,423,027 588,675,423,027 -
Prior year receivable
134,822,681 8,662,097,545 3,318,693,477,615 2,232,762,830,384 1,085,930,647,231
Source: NEITI 2021 data template and NNPC-COMD lifting profile
As indicated in the Table above, NNPC allocated a total of 98.92million barrels of crude oil
valued at $7.11billion (N2.73trillion) for local market in 2021. However, no crude was
delivered to any of the local refineries in 2021, instead, NNPC used 95.25% of this crude for
crude exchange for product at international market under the DSDP arrangement while
4.75% was sold at international market. This may be due to the fact that none of the refineries
was operational in 2021. The sum of N2.23trillion ($5.85billion) was the actual domestic
crude sales receipts in 2021, out of which the sum of N1.64trillion ($4.30billion) represents
2021 sales receipts while the sum of N588.68billion ($1.55billion) relates to settlement of
prior year receivables. The variance is analysed in the Table below.
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Analysis of Variance
Description Amount in Naira Dollar equivalent ($)
Not due for payment 751,106,061,732 1,939,238,343

Outstanding payment 334,824,585,499 871,145,012
Total 1,085,930,647,231 2,810,383,356
The sum of N751.11billion ($1.94billion) was not due for payment as of December 2021,
while the sum of N334.82billion ($871.15million) was outstanding liability as of December
31, 2021.
It is noteworthy that a total sum of N1.20tillion ($3.15billion) was deducted in 2021 against
the domestic sales proceeds for subsidy (N1.16trillion), crude and product losses
(N16.20billion), pipeline repairs and maintenance (N22.05billion) and strategic stock
holding (N6.75billion). See Chapter 4 for details.
3.2.2. Gas Production

The total gas production for the year was 2,743,700 mmscf. This is 8.96% lower than the
2020 production which was 3,013,634mmscf. The Table below shows that for the year
2021, JV arrangement was the largest contributor to the total gas production with 1,490,097
mmscf accounting for 54.31% of the total gas production for the year. This was followed by
Production Sharing Contract with 609,589 mmscf accounting for 22.22%. Marginal Field
was the least contributor to the total gas production with 82,725 accounting for 3.02% of
total gas production for the year. The Table below shows the summary of gas production by
arrangements. The gas production by projects can be found in Appendix 13.
Table 31 – Total Gas Production per Arrangement

Descriptions 2021 2020 Change
mmscf mmscf %
Joint Venture ( JV) 1,490,097 2,060,150 -27.67%
Production Sharing Contract (PSC) 609,589 564,627 7.96%
Sole Risk (SR) 561,289 315,848 77.71%
Marginal Field (MF) 82,725 73,014 13.30%
Total Production 2,743,700 3,013,640 -8.96%
Source: NEITI 2021 Audit Template
Figure 12 below shows that the largest gas production for the past five years was in 2017 with
a production volume of 3,499,695 mmscf. This declined sharply to 2,909,144 mmscf in
2018 and then grew to 3,047,507 in 2019 before declining again to 3,013,640 mmscf in
2020 and then declining by 8.96% to 2,743,700.32 mmscf in 2021. The average production
per day in 2021 was 7,516.99 mmscf.
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Figure 12 – Five-Year Trend of Gas Production (2017- 2021)
Table 32 – Federation Entitlement from JV Production Arrangement (mmscf)

Total NNPC NNPC Share Company Company
Production Equity Equity Share
COMPANY 2021 % 2021 % 2021
AITEO 14,350 55% 7,893 45% 6,458
MOBIL 298,293 60% 178,976 40% 119,317
SPDC 583,698 55% 321,034 45% 262,664
CHEVERON 279,523 60% 167,714 40% 111,809
SEPLAT 1,457 60% 874 40% 583
EROTON 17,840 55% 9,812 45% 8,028
FIRST E&P 6,536 60% 3,922 40% 2,615
HEIRS HOLDINGS 19,004 55% 10,452 45% 8,552
BELEMA 3,739 60% 2,244 40% 1,496
TEPNG 265,656 60% 159,394 40% 106,262
GRAND TOTAL 1,490,097 862,314 627,783
Source: NEITI 2021 Audit Templates
The total Federation entitlement from Joint Venture and Alternative Funding Arrangements
was 862,313.50 mmscf while the company’s share was 627,783.34mmscf. SPDC with
583,697.87mmscf was the highest JV producer of gas for the year while Seplat Petroleum
Development Company was the least producer of JV gas with 1,457.30mmscf.
3.2.2.1. Gas Utilisation

The Table below shows the total gas utilised in 2021, which was 2,743,700.20mmscf. This
comprises of of 249,934.38mmscf (9%) flare gas, 575,381.68mmscf (21%) reinjected gas,
340,381.85mmscf (12%) fuel gas, 1,534,033.72 mmscf (55%) gas sold and un-accounted
gas of 43,968.60 mmscf (2%). The unaccounted gas is the quantities that the companies
cannot account for based on the templates submitted.
Table 33 - 2021 Gas Utilisation
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Table 33 - 2021 Gas Utilisation

S/N Company Flared Re-injection Fuel Sales Unaccounted Total
mmscf mmscf mmscf mmscf mmscf mmscf
1 NAE 3,497 9,673 1,269 - - 14,439
2 NAOC 15,148 10,786 19,758 196,686 - 242,378
3 GREEN ENERGY 1,554 - - - - 1,554
4 NDPR 79 - 329 8,983 0 9,391
5 AITEO 7,105 - 163 7,082 - 14,350
6 ALL GRACE 541 - - - - 541
7 CHEVERON 13,829 - 226,802 38,892 - 279,523
8 FRONTIER 665 - 238 42,065 - 42,967
9 EROTON 6,285 - 758 10,797 - 17,840
10 ESSO E&P (OE) 6,954 16,866 3,243 - 18,526 45,589
11 ESSO E&P 6,780 50,021 2,102 - - 58,903
12 MONIPULO 240 - - - - 240
13 STAR DEEP 14,421 138,672 8,367 - 0 161,460
14 NPDC/SEPLAT JV 11,323 - 780 87,514 - 99,617
15 ORIENTAL 550 3,500 880 - - 4,930
16 CONTINENTAL OIL 7,411 - 210 - 5 7,626
17 CONOIL 86 - 85 - - 170
18 NPDC/ELCREST JV (OML 40) 2,044 - - - - 2,044
19 NPDC/FHN (OML 26) 3,033 778 176 - 0 3,987

20 NPDC/NECONDE (OML 42) 7,836 - 390 4,514 0 12,739
21 NPDC 16,297 7,959 5,980 32,013 4,459 66,708

22 MOBIL 26,938 197,970 26,163 29,714 17,510 298,293
23 SPDC 27,054 8,066 8,837 539,741 583,698
24 SNEPCO 11,319 - 3,479 13,688 28,486
25 STERLING EXPLORATION 7 772 1,053 43,292 0 45,123
26 STERLING GLOBAL 5 51 157 - 0 213
27 MIDWESTERN 724 - 230 - 0 955
28 PILLAR OIL 451 - 80 - 0 530
29 PLATFORM 1,476 - 138 7,177 0 8,791
30 UNIVERSAL 535 - 7 127 - 669
31 NPDC/ND WESTERN JV 1,583 - 201 114,203 - 115,987
32 SEPLAT 1,457 1,457
33 TUPNI 1,934 78,994 11,693 128,844 - 221,465
34 APDNL 9,601 6,828 664 - 17,092
35 APENL 827 1,446 552 2,825
36 CHORUS 2,546 - 38 31 - 2,615
37 DUBRI 320 - 4 324
38 HEIRS HOLDINGS 2,620 2,427 13,956 19,004
39 EXCEL 8 8
40 BRITTANIA-U 422 422
41 WALTERSMITH 0 385 386
42 FIRST E&P 6,109 - 427 6,536
43 BELEMA 3,574 - 165 3,739
44 NEWCROSS E&P 1,911 - 107 2,323 4,340
45 YINKA FOLAWIYO 3,107 - - - - 3,107
46 TEPNG 8,534 42,268 11,663 199,722 3,469 265,656
47 AMNI 1,533 349 100 1,982
48 NETWORK 672 - 15 - - 687
49 PANOCEAN 1,233 - 653 12,107 13,994
50 ENAGEED 1,714 1,714
51 ENERGIA 6,002 563 6,565
52 SUMMIT 40 40
TOTAL 249,934 575,382 340,382 1,534,034 43,969 2,743,700
Table 34 below shows Comparison of gas utilisation between 2020 and 2021. The total
utilized gas of 2,699,732mmscf does not include unaccounted gas of 43,968.60mmscf.
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Table 34 - Comparison of Gas Utilization between 2020 and 2021

Year Gas Production Fuel reinjected Flared sales Total Utilization
volume % of % of volume % of Volume % of volume % of

volume
(mmscf) production production (mmscf) production (mmscf) production (mmscf) production
2020 158,165 5% 593,376 20% 230,488 8% 1,916,742 64% 2,898,770 96%

3,013,640.00
2021 2,743,700 12% 21% 9% 56% 98%
340,382 575,382 249,934 1,534,034 2,699,732
- - -
Diff 7% 1% 110,798 1% -232,086 -8% 2%
269,940 182,217 17,994 199,038
Source: NEITI 2021 Audit Templates and NEITI 2020 Audit report
3.2.2.2. Federation Entitlement from JV Gas Sales
A total of seven (7) JVs produced gas of 1,490,096.85 mmscf. From the total JV gas produced,
gas transferred to third parties by way of sales accounted for 839,904.02mmscf or 56.37%
of total production. These were the quantities of gas in exchange for money. The Table below
presents the share of gas sales between the Federation and the JV partners.
S/N COMPANY SALES JV PARTNER FEDERATION

MMscf % MMscf % MMscf
1 AITEO 7,082.36 45% 3,187.06 55% 3,895.30
2 MOBIL 29,713.77 40% 11,885.51 60% 17,828.26
3 SPDC 539,740.78 45% 242,883.35 55% 296,857.43
4 CHEVERON 38,891.68 40% 15,556.67 60% 23,335.01
5 EROTON 10,797.26 45% 4,858.77 55% 5,938.49
6 HEIRS HOLDINGS 13,956.17 45% 6,280.28 55% 7,675.89
7 TEPNG 199,722.00 40% 79,888.80 60% 119,833.20
TOTAL 839,904.02 364,540.44 475,363.58
Source: NEITI 2021 Templates
Pricing of Federation Gas

The pricing and valuation were carried-out by the Crude Oil Marketing Division (COMD)
using the Official Selling Price (OSP) and average of Platts Lpgaswire Nwe Propane or Platts
LPGaswire Nwe Butane Or Mont Belvieu Opis Non-Tet Price Quotes depending on the
product and also the pricing options selected by the customers. The pricing options could be
prompt, deferred or advanced. See Appendix 14 for details of pricing methodology for each
of the Federation gas products.
3.2.2.3. Summary of Gas Sales and Receipts on behalf of the Federation

out, find below the summary of gas sales and receipts by NNPC on behalf of the Federation.
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Table 36 - Summary of Gas Sales and Receipts on behalf of the Federation

Export Gas Sales volume Sales Value ($) Naira equivalent Sales Receipts Sales Receipts Variance ($)
(N) ($) (N)
Export gas
(LPG/NGL/EGTL)- 701,198 414,225,170 - 158,445,888 - 255,779,283
MT/$
RA gas sales- 827,279 447,015,035 - - 447,015,035
(LPG)MT/$
Sub-total-LPG 1,528,477 861,240,206 158,445,888 702,794,318
NLNG gas
(Feedstock) -BTU/$ 422,295,718 704,165,971 - 550,451,216 - 153,714,755
Sub-total: 2021 1,565,406,177 - 708,897,104 - 856,509,073
lifting
Feedstock -BTU/$- 41,239,196 48,326,745 - 41,965,527 - 6,361,219
Prior year
receivable
Total export (A) 1,613,732,922 750,862,631 862,870,291
Domestic Gas Sales volume Sales Value ($) Naira equivalent Sales Receipts Variance (N)
(Mt) (N) (N)
Domestic Gas (NGL)
-MT/N 2021 70,013 40,097,746 16,280,232,540 - 16,280,232,540 -
Lifting
Domestic gas- Prior 7,001 2,546,614 965,166,611 - 898,090,807 67,075,804
year receivable
Total domestic (B) 50,873,359 17,245,399,151 - 17,178,323,347 67,075,804
Sources: NEITI 2021 Template, NNPC-COMD lifting profile and bank statements
From the Table above, NNPC lifted and sold a total of 1,528,477mt ($861.24million) and
422,295,718btu ($704.51million) of LPG/NGL/EGTL and NLNG Feedstock respectively at
international market in 2021 while 70,013mt ($40.10million) of NGL was sold at local
market in 2021. The sum of $750.86million and N17.18billion ($42.99million) were
respectively traced to the respective bank accounts as actual gas sales receipt in 2021. The
lifting of RA gas was for the repayment agreements with some JV Partners to defray 2016
outstanding cash call, however, NNPC did not provide relevant bank escrow account to
confirm the payments. The variance is analysed in the Table below.
Analysis of the Variance

Revenue streams Not due for First lifting Credit note ($) MCA ($) Outstanding ($) Total ($)
payment ($) deposit ($)
Export gas 32,685,859 1,250,000 18,959 - 221,824,464 255,779,283
(LPG/NGL/EGTL)- MT/$
RA gas sales-(LPG)MT/$ 447,015,035 447,015,035
NLNG Feedstock gas - 76,209,804 - 48,918,608 28,586,343 - 153,714,755
MBTU/$
Feedstock - Prior year - - - 6,361,219 - -
receivable
Total 108,895,663 1,250,000 48,937,567 34,947,561 668,839,500 856,509,073
Credit note (N)
Domestic gas- Prior year 67,075,804
receivable
3.2.3. Other financial flows to the Federation
In addition to the 2021 export crude, domestic crude sales, export gas and domestic gas sales
receipts respectively on behalf of the Federation, there were other financial flows received by
the NNPC on behalf of the Federation in 2021 amounting to $2.16billion as presented in the
Table below. Of this amount, the sum of N169.039billion and $722.596million consisting of
the Naira component of transportation fee and miscellaneous revenue as well as NLNG
dividend respectively were not remitted to the Federation Account.
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Table 37 - Other financial flows to the Federation

Other Financial flows Amount Dollar Amount in Naira Dollar equivalent
(A) (B) (A+B) ($)
Transportation fee 194,848,767 9,725,273,450 219,181,416
*Miscellaneous Revenue 816,551,162 159,309,487,219 1,215,143,754
NLNG dividend and interest 722,595,886 - 722,595,886
Total 1,733,995,814 169,034,760,669 2,156,921,056
Source: NEITI Audit Template
*The breakdown of miscellaneous revenue from NNPC operations is contained in appendix 15.
3.2.4. Non-Financial Flows

Non-financial flows are sales proceeds from crude oil and gas lifted as in-kind payments by
Exploration and Production companies under a defined production arrangement. The crude
oil and gas for in-kind payments are lifted and sold by NNPC on behalf of different parties,
including; FIRS for settlement of PPT, CIT and EDT; NUPRC for settlement of royalty and
concession rentals; Federation for profit share and the JV Partner for cost recovery. These
production arrangements include PSC, SC production arrangements and alternative funding
under JV production arrangement.
3.2.4.1. In-Kind Flows Under Production Sharing Contract (PSC) Operations
Production Sharing Contract is an arrangement that allows an Oil Company to bring in the
technology and capital to explore for oil and gas resources, with the hope of recovering its
investment and share profits with the host national oil company (NNPC). Cost is recoverable
with crude oil in the event of commercial finding, with provisions made for:
◦ Royalty Oil – to meet the Royalty liability due to the Government for the period.
◦ Tax Oil – to cover the Petroleum Profits Tax liability determined for the period.
◦ Cost Oil – to meet the PSC Operator’s CAPEX and OPEX costs.
◦ Profit Oil – Shared between NNPC and the PSC Operator on an agreed profit-sharing
ratio.
3.2.4.2. In-kind Flows under Service Contract (SC) Operations
Service Contract is an arrangement where NNPC engages the services of a contractor on a

purely technical basis, with no equity interest in the assets and outputs of operation. In 2021,
NPDC took over the management of OML 116, which was hitherto managed by AENR. The
following are the expected payments from the arrangement:
◦ Royalty Oil – to meet the Royalty liability due to the Government for the period.
◦ Tax Oil – to cover the Tax liabilities determined for the period.
◦ Cost Oil – to meet the SC Operator’s exploration, development and production costs.
◦ Profit Oil – Federation.
3.2.4.3. In-kind flows under Alternative Funding (AF) Arrangements
As a result of inability of the Federation to meet cash call obligation on a timely basis, various
Alternative Funding Arrangements have been entered into with some Joint Venture
Companies to provide the funds needed to enable the running of oil and gas operations of
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certain fields. The current forms of Alternative Funding Arrangements are in two broad
categories, which are:
▪ Third Party Financing
▪ Modified Carry Agreements (MCAs)
The third-Party financing arrangements included project Cheetah, Santolina, and Falcon
under the Repayment Agreements (RA) for Cash Call legacy liabilities owed to SPDC, NAOC,
TEPNG, Mobil and Chevron.
MCA is an arrangement between the JV partners and NNPC that allows the JV partners to, in
addition to its equity contribution for the execution of Capital Projects, carries NNPC’s equity
contribution, which is payable by means of Carry Tax Relief (CTR) and Carry Oil among
other terms.
An Escrow Account is set up, and the sales proceeds, with respect to the Carry oil and Share
oil, are paid into the Escrow Account.
Table below shows the actual in-kind flows under the PSC, SC production arrangements and
MCA under JV arrangement.
NNPC in-kind Lifting of crude from PSC, SC and AF Arrangements for FIRS and NUPRC
The Table below shows the summary of PSC, SC and AF in-kind lifting by NNPC for FIRS and
NUPRC in 2021
Table 38 - Summary of PSC, SC and JV (AF) In-Kind Lifting by NNPC

Non-Financial Flows-Crude Sales Sales Value ($) Sales Receipts Variance ($)
volume ($)
(BBL)
PSC PPT 20,228,281 1,480,045,347 1,088,903,250 391,142,097
PSC Royalty 30,649,427 2,116,041,887 1,642,771,247 473,270,640
PSC Concession rental 469 1,832,237 1,230,710 601,527
Sub-total: 2021 lifting 50,878,177 3,597,919,471 2,732,905,207 865,014,264
PSC PPT Prior year 9,844,496 426,383,475 426,383,475 -
receivable
PSC Royalty Prior year 6,988,123 303,956,424 303,956,424 -
receivable
PSC concession rental Prior 34,800 1,458,855 1,375,540 83,315
year receivable
Sub-total: Prior year 16,867,419 731,798,754 731,715,439 83,315
Receivable
Total PSC (A) 67,745,596 4,329,718,224 3,464,620,646 865,097,578
SC PPT 316,763 20,912,756 20,912,756 -
SC Royalty 197,000 13,119,434 13,119,434 -
Total SC (B) 513,763 34,032,190 34,032,190 -
MCA crude PPT 2,240,843 120,364,211 115,574,450 4,789,761
MCA crude EDT 10,110 671,500 671,500 -
MCA crude Royalty 614,615 32,586,267 31,177,513 1,408,753
Sub-total: 2021 lifting 2,865,567 153,621,978 147,423,464 6,198,514
MCA EDT Prior year 246,210 8,228,968 6,582,365 1,646,603
receivable
Total MCA (C) 3,111,777 161,850,946 154,005,829 7,845,117
RA crude Royalty (D) 4,005,046 256,171,187 231,356,787 24,814,400
Grand total (A+B+C+D) 75,376,182 4,781,772,548 3,884,015,452

897,757,095
Source: NEITI 2021 Template, NNPC-COMD lifting profile and bank statements
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From the above Table, the total liftings from PSCs for in-kind payments of taxes, royalty and
concession rental in 2021 was 50.88million barrels valued at $3.60billion, out of which the
sum of $2.73billion was received leaving a variance of $865.01million. The sum of
$731.72million was also received from prior year receivable of $731.80million, leaving a
variance of $83,315.
The total lifting from service contract arrangement for in-kind payment of taxes and royalty
in 2021 was 513,763bbls valued at $34.03million, out of which the sum of $20.91million
was for the payment of PPT and the sum of $13.12million represents royalty payment.
The total liftings from MCA for in-kind payments of taxes and royalty in 2021 was 2.8million
barrels valued at $153.62million, out of which the sum of $147.42million was received
leaving a variance of $6.20million. The sum of $1.65million was also received from prior
year receivable of $6.58million, leaving a variance of $1.65million.
4million barrels of crude oil was lifted to pay royalty due on crude lifted for repayment
agreement (RA). the sum of $231.3mbillion was received out of the sales value of
$256.17million, leaving a variance of $24.81million. The analysis of the variance is
presented in the Table below.
Analysis of the variance

Revenue streams Not due for Underpayment Outstanding Total ($)
payment ($) ($) liabilities ($)
PSC PPT 391,142,098 - - 391,142,097
PSC Royalty 469,933,131 3,337,509 - 473,270,640
PSC Concession rental 307,283 - 294,244 601,527

Sub-total: 2021 lifting 861,382,511 3,337,509 294,244 865,014,264
PSC concession rental Prior year - - 83,315 83,315

receivable
Sub-total: Prior year Receivable - - 83,315 83,315
Total PSC (A) 861,382,511 3,337,509 377,559 865,097,579
MCA crude PPT 802,346 - 3,987,415 4,789,761

MCA crude Royalty 235,984 - 1,172,769 1,408,753
Sub-total: 2021 lifting 1,038,330 - 5,160,184 6,198,514
MCA EDT Prior year receivable - - 1,646,603 1,646,603
Total MCA (B) 1,038,330 - 6,806,787 7,845,117
RA crude Royalty (C) - - 24,814,400 24,814,400
Total (A+B+C) 862,420,841 3,337,509 31,998,746 897,757,096
From the above analysis, a total sum of $861.38million was not due for payment under PSC
arrangement as of 31st December 2021. The sum of $3.34million was the amount
underpaid for PSC Royalty by NNPC as a result of remittance of the sales proceeds in Naira
without applying appropriate exchange rate advised by CBN while the sum of $377,559
stood as outstanding liabilities on concession rental as of 31st December 2021.
Similarly, a total sum of $1.04million was not due for payment under MCA arrangement as of
31st December 2021 while the sum of $6.81million stood as outstanding liabilities on MCA
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taxes and royalty as of 31st December 2021. The outstanding liability on RA royalty as of 31st
December 2021 was $24.81million.
NNPC Gas In-kind Lifting from MCA Arrangement
Table 39 - Summary of MCA Gas In-Kind Lifting by NNPC

Non-Financial Flows-Gas Sales Value ($) Sales Receipts Variance ($)
($)
MCA-CIT Feedstock 9,030,938 6,674,556 2,356,382
MCA-EDT Feedstock 366,886 - 366,886
MCA-Royalty Feedstock 2,265,827 1,674,620 591,207
Total for 2021 11,663,651 8,349,176 3,314,475
MCA-CIT Feedstock prior year receivable 3,197,735 2,314,777 882,958
MCA-EDT Feedstock prior year receivable 1,791,366 - 1,791,366
MCA-Royalty Feedstock prior year receivable 802,299 580,768 221,531
Total for prior year receivables 5,791,399 2,895,545 2,895,854
Sub-total 17,455,050 11,244,721 6,210,330
From the above Table, the total sum of $11.66million was the value allocated for the payment
of taxes and royalty due from MCA out of $28.59million value exported for MCA in 2021,
while the balance of $16.93million was due to relevant JV Partners. The sum of $8.35million
and $2.90million were however received in 2021 for 2021 export and prior year receivable
respectively, leaving a total variance of $6.21million. The variance represents outstanding
liability due of $4.89million and amount not due for payment as of 31st December, 2021 in
the sum of $1.32million.

1. The crude oil volume losses in 2021 due to measurement errors and theft/sabotage
are 31.04million barrels and 37.57million barrels respectively. The combined losses was
11% of the actual metered production volume at flow station. The losses of crude flows into
Bonny terminal were 31% of production flow through Bonny terminal, the losses of crude
flow into Forcados and Brass terminals were respectively 9% and 7% of production volume
pumped through the Forcados and Brass terminals respectively.
Implication:
Incessant crude oil losses in the industry as a result of theft, sabotage and metering errors
remain a major cause of revenue losses to the Federation.
Recommendation:
The Federal Government should ensure proper pipeline security surveillance using satellite
imagery and other sophisticated ICT tools to ensure real time monitoring and decisive actions
on pipeline vandalism. The companies should also work with the Federal Government to
ensure the implementation of fiscal provisions in the PIA for the welfare of Host
Communities and thus strengthening responsibility for communal ownership of crude oil
pipelines.
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2. The sum of $278.813million was earned by the Federation from trial marketing
period crude lifting in 2021, however, this amount was not swept to the Federation in 2021,
though the JV Partner’s (First E&P) share was transferred to the Partner as soon as the
revenues were received into the TMP escrow account jointly operated by both parties.
Implication:
Loss in time value of money as a result of delay in remittance
Recommendation:
NNPC should ensure that revenues due to the Federation are remitted as soon as received.
NNPC response:
The sum stated including interest accrued was swept to the Federation Account at the
conclusion of TMP which traditionally is the practice in the event of over or under lift at the
close out reconciliation. The proceeds were reported in the September 2022 FAAC report.
3. The sum of $69.30million was realized from the sale of profit oil lifted from OML
116, currently operated by NPDC on behalf of the Federation, hitherto operated by AENR
under service contract arrangement. However, NPDC claimed cost recovery of
$61.68million, leaving the balance of $7.61million (N3.14billion as per Appendix 21-2021
NAPIMS AFS) outstanding as at 31st December, 2021.
Implication:
Recommendation:
NNPC should ensure that revenues due to the Federation are remitted as soon as received.
NNPC response:
The finding which established that NEPL unremitted balance to federation is to the tune of
$7.61M is correct and NAPIMS is following up with NPDC to ensure payment of the profit oil
to the Federation Account.
4. NAPIMS continues to pay cash call to Newcross, despite the fact that Federation
interest has been transferred to NPDC. Cash call payments to the tune of N11.470billion and
US$29.218million were made by NAPIMS in 2021 with respect to asset already transferred
to NPDC since 2019.
Cash Call Receivables from NPDC with respect to NPDC NAOC and NPDC Newcross for
which NAPIMS paid cash call on behalf of the Federation, despite the fact that NAPIMS has
transferred Federation interest in the assets to NPDC are N287.55billion and N42.14billion
respectively.
Recommendation:
There is the need to carry out independent reconciliation of outstanding amounts due to the
Federation as part of a comprehensive reconciliation of debts outstanding between NNPC
Group and the Federation, especially with the advent of PIA.
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NNPC response:
NAPIMS continued payment of cash call to Newcross during the transition of the transfer.
This is to avoid disruption of the JV Operations due to lack of funds. NAPIMS has a reconciled
position of the total cash call paid to Newcross on behalf of NPDC.
5. The audit observed that none of the refineries was operational in 2021 despite
spending about N200billion within 2020 and 2021 on refinery rehabilitation. This amount
was deducted from the Federation sales proceeds.
Implication:
Inefficiency in resource allocation, which has hindered progress and limit the potential for
growth and development in the downstream sector of Nigeria oil and gas industry.
Recommendation:
Special investigation should be instituted to carry out status of the refineries and value for
money assessment on the refineries
NNPC response:
Rehabilitation of the old Port Harcourt Refinery (Area 5) at 60% Completion EPC:
Technimont Project: Rehabilitation Quick fix project is on-going in WRPC EPC: Daewoo E&C
Nigeria Limited (DECN)Project: Quick fix Quick fix project is on-going in KRPC EPC: DECN
Project: Quick fix. The quick-fix initiative on WRPC and KRPC is expected to restore both
refinery plants to a minimum of 60 per cent of its nameplate capacity by Q4 2024. Also note
that these projects (WRPC and KRPC) are been executed in three work packages as a
Maintenance Services contract by Daewoo E&C Nigeria Limited, with a duration of Fifteen
(15) and Twenty-One (21) months respectively.
6. The sum of N1.20trillion ($3.01billion) was deducted from domestic sales proceeds.
Subsidy accounted for N1.16trillion, Crude & product losses accounted for N16.20billion,
Pipeline repairs accounted for N22.05billion and Strategic stock holding accounted for
N6.75billion.
Implication:
These deductions remain a heavy cost to the Federation Revenue remittance.
Recommendation:
1. Previous NEITI audit reports have consistently highlighted transparency issues in the
deductions from federation crude sales. Full implementation of PIA provisions will address
the issues. However, subsidy has been terminated by the Federal Government in 2023.
2. The practice of charging crude oil and product losses, Pipeline repairs and Strategic
stock holding cost to Federation should no longer be acceptable under the PIA. The Federation
should not be made to pay for pipeline maintenance, strategic holding cost and losses that the
new commercially oriented NNPC has incurred on its own.
NNPC response:
The submission is in line with our 2021 record.
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7. About 90% and 46% of PSC FIRS-Tax oil and PSC NUPRC-Royalty oil Cargoes were
respectively borrowed and converted to DSDP. The sales proceeds in dollars were originally
meant to be remitted to the respective FIRS and NUPRC designated accounts within 30 days
otherwise penalties will apply. However, NNPC applies a 90-day payment period (without
payment of late penalty) and remits the sales proceeds in Naira as in the case of domestic
crude to the respective agencies designated accounts.
Implication:
Loss of revenue in the sum of $3.34million to the Federation as a result of remittance of the
sales proceeds of PSC royalty in Naira without applying appropriate exchange rate advised by
CBN and loss in time value of money as a result of delay in remittance.
Recommendation:
The transaction should be investigated and NNPC should pay the exchange differential of
$3.34million.
NNPC response:
Due to National Energy Security Demand, Federal Government directed that in addition to
traditional 445,000 barrels allocated for domestic consumption NNPC could utilize Royalty
and Tax oil volumes to Augment. Subsequently, the 90-day payment term in Naira for
Federation domestic cargoes was also applied on the statutory obligation volumes.
Furthermore, NNPCL applied exchange rate as advised which relates to the month of lifting,
however a reconciliation team as directed by the President is working to resolve all
outstanding issues between FAAC and NNPC.
8. The outstanding liabilities on crude royalty/concession rental and taxes from PSC
operations are in the sum of $26.36million and $5.63million respectively. Of these
outstanding liabilities, the sum of $83,315 and $1.64million relate to prior year outstanding
liabilities on concession rental and education tax respectively yet to be remitted to the
respective agencies’ accounts as at 2021. Similarly, the outstanding liabilities on gas royalty
and taxes are in the sum of $547,955 and $3.74million. Of these outstanding liabilities, the
sum of $69,633 and $882,958 relate to the prior year outstanding liabilities on gas royalty
and taxes respectively yet to be remitted to the respective agencies’ accounts as at 2021.
Implication:
Recommendation:
NNPCL should ensure that revenues due to the relevant agencies are remitted as at when due
NNPC response:
Work in progress.
9. The sum of $194.85million and N9.73billion was the pipeline transportation revenue
earned from JV operations. While the dollar receipt was remitted to the Federation Account,
the Naira receipt is yet to be remitted as the time of this report. Furthermore, there was no
adequate disclosure of tariff rate and volumes with respect to what was paid to NNPCL by the
JV operators.
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Implication:
Opaqueness in accounting for transportation revenue
Recommendation:
NNPCL and companies should provide the basis for computation and NNPCL should ensure
that revenues due to the Federation are remitted as soon as received.
NNPC response:
The amount is still being reconciled.
10. The sum of $702.19million and N343.56million were the miscellaneous revenue
earned from JV operations. While the dollar receipt was remitted to the Federation Account,
the Naira receipt has neither been remitted to the Federation nor was it properly accounted
for.
Implication:
Potential loss of revenue to the Federation
Recommendation:
NNPC to ensure that revenue due to the Federation are remitted as soon as received
NNPC response:
We have initiated the process of remitting the amount to the Federation.
11. Included in export gas sales of $414.23million is the sum of $242.05million revenue
earned from Escravos gas to liquid (EGTL). Of this amount, only the sum of $20.22million
was received into the CNL proceed account and remitted in 2021, the balance of
$221.82million was neither received nor properly accounted for.
Implication:
Recommendation:
NNPC should account for this revenue
NNPC response:
The sum of $20.22million represents 8% of gross revenue which is payable as price balance
per contract agreement noting that revenues are from an SPV project in partnership with
Chevron.
12. The sum of $722.60million was paid to NNPC by NLNG as dividend (including bank
interest) earned by the Federation in 2021. This amount was neither remitted to the
Federation nor properly accounted for.
Implication:
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Recommendation:
NNPC should properly account for this revenue
NNPC response:
NLNG dividend is no longer under NNPC purview. The account is under CBN custody
managed by Min of Finance/ OAGF.
13. The sum of N107.47billion was validated as domestic gas revenue based on COMD
record, however, NAPIMS reported the sum of N84.47billion as domestic gas revenue in
2021 NAPIMS AFS
Implication:
Discrepancies in records raise concerns about the integrity and accuracy of the data
Recommendation:
NNPC should improve data management processes and establish controls to prevent future
discrepancies. Regular monitoring, data reconciliation, and cross-verification can help
minimize the occurrence of such discrepancies and maintain data integrity.
NNPC response:
The COMD record being referenced is the actual cash received into the Gas revenue account
based on FAAC report. However, NAPIMS AFS is based on the accrual concept of accounting
in line with IFRS.
14. The sum of $1.57billion (N624.67billion) was validated as export gas revenue based
on COMD record, however, NAPIMS reported the sum of N563.98billion as export gas
revenue in 2021 NAPIMS AFS
Implication:
Recommendation:
NNPC response:
in line with IFRS.
15. The sum of $1.64billion (N655.16billion) was validated as export crude oil sales
revenue based on COMD record, however, NAPIMS reported the sum of N540.75billion as
export crude revenue in 2021 NAPIMS AFS
Implication:
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Recommendation:
NNPC response:
in line with IFRS.
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CHAPTER
FOUR
REVENUE COLLECTION AND RECONCILIATIONS
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FOUR
REVENUE COLLECTION AND RECONCILIATIONS
A major component of the EITI process is the disclosure of revenue payments by companies
and a corresponding declaration by government on what is received. The role of the IA is to
verify and reconcile the reported payments and receipts. The results of the verifications and
reconciliations carried out are presented in this chapter.
4.1. Revenues Covered in the Report
The 23 revenue streams that are covered in this report are classified under 4 categories;
A. Revenue from the Federation share of production entitlements

1. Proceeds from the sale of federation export crude oil
2. Proceeds from the sale of profit oil
3. Proceeds from the sale of domestic crude
4. Proceeds from the sale of federation gas
5. Proceeds from the sale of feedstock
B. Revenue streams that are specific to oil and gas companies as taxes, levies and other
Payments on licenses or use
6. Petroleum profit tax (PPT)
7. Royalty (oil)
8. Royalty (gas)
9. Signature bonus
10. Flared gas payments
11. Concession rentals
12. Transportation fees
13. Miscellaneous income
C. Revenue from oil and gas companies as other forms of taxes, levies and returns on
investment
14. Company Income Tax (CIT)
15. Value Added Tax (VAT)
16. Dividend from NLNG
17. Pay as you earn (PAYE)
18. Capital Gain Tax (CGT)
19. Withholding Tax (WHT)
20. Education Tax (EDT)
D. Revenue from oil and gas companies paid to Sub-National entities

21. Niger Delta Development Commission (NDDC) levy
22. Nigerian Content Development & Monitoring Board (NCDMB) levy
23. NESS Levy
The Sub-National entities are statutorily enabled to directly collect and expend accrued
revenue in accordance with their establishment law.
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The companies and government entities have comprehensively disclosed revenue payments
and receipts and all revenue streams with the exception of NESS fees, PAYE and miscellaneous
income were reconciled in accordance with the data assurance procedures set out in the
Scoping Report.
4.2. Revenue from Sales of Crude Oil, Gas and NLNG Feedstock
Category A above, consists of revenues accruable to the Federation from the sales of crude oil,
gas and feedstock. Also included are, the Federation share of production entitlements from
crude oil, gas and feedstocks from the production arrangements which are sold by NNPC and
proceeds paid as in-kind payments into FIRS and DPR accounts as taxes, royalties and other
levies. Table 40 below shows the breakdown of total revenue remittance to the Federation
from the sales of crude oil and gas while Table 41 shows the breakdown of in-kind payments
made to the designated agencies’ accounts in 2021.
Table 40 -Sales of Federation Crude Oil and Gas

Revenue flow 2021
US$'000
Sale of Federation Crude Oil & Gas:
Proceeds from the sales of Federation export crude oil 5,365,982
Proceeds from the sales of domestic crude oil 5,851,714
Proceeds from the sales of profit oil (PSC/SC) 90,470
Proceeds from the sales of Federation equity gas 648,441
Proceeds from the sales of Feedstock 603,661
Total Sales of Federation Crude Oil and Gas 12,560,268
Source: NEITI 2021 Audit
Included in the aggregate sum of U$5.366billion proceeds of Federation export crude sales
above is a total sum of US$286.423million which was not remitted to the Federation by
NNPCL. This unremitted sum consists of US$278.813million earned by the Federation from
trial marketing under First Exploration and Production JV and US$7.61million from OML
116 operated by NPDC. Similarly, the sum of US$5.852billion proceeds from the sales of
domestic crude oil above includes the sum of US$871.145million unremitted domestic crude
sales as at 31st December, 2021.
In addition, included in the sum of US$648.441million Federation equity gas proceeds

reported above is the sum of US$45.758million that remained as unremitted balance in the
domestic gas proceeds account as at the end of 2021.
Total crude oil lifting and feedstock sales for the accounts of FIRS and the defunct DPR in
2021 amounted to a total value of US$3,895,261,000. This is analysed as in-kind payments
shown in the Table below:
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Table 41 - Total In-Kind Payments

Revenue flow 2021
US$'000
PSC /SC/ MCA/RA In-Kind Payments
PSC Tax Oil 1,515,287
PSC Royalty Oil 1,946,728
PSC Concession Rentals 2,606
SC PPT 20,913
SC Royalty 13,119
MCA Tax Oil 115,574
MCA – Royalty Oil 31,179
MCA- EDT Oil 7,254
MCA Feedstock (CIT) 8,989
MCA Feedstock (EDT) -
MCA Feedstock (Royalty) 2255
RA Royalty Oil 231,357
Total PSCs / MCAs In-Kind Payments 3,895,261
Source: NEITI 2021 Audit
4.3. Payment Reconciliation between Companies and Government Entities
All Revenues described under Categories B, C and D above (inclusive of in-kind payments
described under Category A) are paid by companies in the oil and gas industry and these
payments have been reconciled (except for NESS, PAYE and Miscellaneous payments). The
reconciliation was done by reviewing records as contained in the data templates submitted by
the companies and validating them against source documents. Subsequently, a reconciliation
meeting was held between the government entities and companies to agree a final position,
particularly on areas where discrepancies existed.
4.4. Summary of Reconciled and Unilaterally Disclosed Revenue Flows by Streams
Table 42 below shows the revenue streams covered in the reconciliation exercise with their
initial and final reconciliation positions. The total reconciled revenue was
US$21,648,054,000 representing 93.97% of total receipts while the total unreconciled
revenue is US$7,808,000 representing 0.03% of total receipts. The total unilaterally
disclosed revenue was US$1,390,226,000, representing 6.03% of total revenue receipt.
Proceeds from crude oil and gas sales were 100% validated from records of NNPC. The
percentage of total unreconciled discrepancies to the volume of reconciled revenue are
within the set threshold of 0.05% (see Appendix 1).
Table 42 below presents individual companies' payments by revenue streams.
Nigeria
Extractive
Industries

Initiative
Table 42 -Summary of Reconciled and Unilaterally Disclosed Revenue Flows by Streams
Initial Template Adjustment Adjusted Figures
Revenue Streams Government Company Difference Government Company Receipt by Payment 2021 2020 Contribution
Govt from Unsolved Unsolved on %
Company Difference Difference
US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000
*Proceeds from the sales of Federation 903,556 903,556 3.92%
Export crude oil (Less In
NNPC royalty and NNPC taxes)
Proceeds from the sales of Domestic crude 5,851,714 5,851,714 25.39%
oil
Proceeds from the sales of profit oil 90,470 90,470 0.39%
NEITI 2021 OIL AND GAS INDUSTRY REPORT

Proceeds from the sales of Federation 648,441 648,441 2.81%
Proceeds from the sales of Feedstock 603,661 603,661 2.62%

Petroleum Profit Tax (PPT) 2,830,693 3,238,957 408,264 150,230 258,034 3,394,061 3,393,562 499 14.73%
Royalty (Oil) 4,536,817 3,985,886 550,931 43,557 594,488 4,841,760 4,840,578 1,182 650 21.01%
Royalty (Gas) 91,922 79,331 12,592 544,508 557,100 636,430 636,430 2.76%
Gas Flare Penalty 237,629 242,181 4,552 11,530 6,979 249,159 248,830 330 466 1.08%
Concession Rental 8,623 6,761 1,861 313 2,174 8,935 8,935 82 0.04%
Transportation Fees 219,947 230,068 10,121 0 10,101 219,181 219,181 16 0.95%
80
Signature Bonus and License Fees 487,055 29,466 457,589 3,561 461,170 490,616 490,636 20 2.13%
Company Income Tax (CIT) 8,552 567,609 559,057 558,824 612,593 612,593 2.66%
Value Added Tax (VAT) 279,726 564,244 284,524 285,762 1,428 565,487 565,520 33 130 2.45%
Dividend from NNLG 722,596 722,596 3.14%
Capital Gain Tax (CGT) 0 22,876 22,876 26,562 3,686 26,562 26,562 0.12%
Education Tax (EDT) 166,799 203,411 36,611 52,354 15,743 225,736 225,398 337 0.98%
Niger Delta Development Levy (3%) 801,127 787,059 14,068 4,108 9,614 797,019 796,673 346 3.46%
Nigerian Content Development & 61,702 57,232 4,470 4,981 9,441 66,683 66,673 10 69 0.29%
Monitoring Board (1%)
Withholding Tax (WHT) 407,997 688,275 280,278 293,187 13,080 701,201 696,150 5,051 694 3.04%
Subtotal from Reconciliation (A) 10,138,589 10,703,355 5

- 64,773 1,971,260 1,406,535 21,655,862 21,648,161 7,808 2,107 93.97%
Pay-As-You-Earn (PAYE) - States 128,460 128,585 1- 25 0 0 128,585 128,585 N/A N/A 0.5579%
Ness Fee 16,689 16,689 0 0 16,689 16,689 N/A N/A 0.07%
Miscellaneous Income 12,688 12,381 307 17,091 17,398 1,244,952 1,244,952 N/A N/A 5.40%
Subtotal - Unilateral Disclosed (B) 157,837 157,655 182 17,091 17,398 1,390,226 1,390,226 0 6.03%
Total (A + B) 10,296,426 10,861,010 564,590 1,988,351 1,423,933 23,046,088 23,038,388 7,808 100.00%
NNPC’s royalty ($222,792,000), PPT ($308,145,000) and CIT ($36,227,000) payments on behalf of the Federation from the Proceeds of
Federation export crude in the sum of $5,365,982,000 (See Table 42 above) prior to remittance at FAAC.
FULL
Report
Nigeria
Initiative
Industries
Extractive
Transparency
Table 43 -Summary of Revenue Streams by Company

Earn (PAYE) FIRS
Earn (PAYE) STATES
-
-
NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Licence fee & Acreage rentals
Signature Bonus
Petroleum Profits Tax (PPT)
Company Income Tax (CIT)
Education Tax
Capital Gain Tax (CGT)
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Withholding Tax (FIRS)
Withholding Tax (STATES)
Pay As You
Pay As You
Miscellaneous Income
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures
(JV)
81
1 AITEO 29 23,000 0 295 0 0 0 0 0 0 0 2,751 231 2,303 0 78 1,308 0 0 0 0 122 30,087
2 Belema Oil 55 13,828 0 0 0 0 0 0 0 0 0 1,151 25 390 0 0 285 0 0 685 0 0 16,363
3 Chevron 49, 317,960 21,677 832 11,716 0 0 105,232 927 7,759 0 35,721 7,357 56,126 13,243 931 51,695 41 1,838 99,548 0 7,134 739,736
Nigeria Ltd 51,
86,
88-
91
&
95
4 Eroton 18 43,227 13 49 0 0 0 3,393 286 994 0 0 0 219 0 80 164 10 0 2,300 0 241 50,974
5 First E&P 83, 47,513 0 116 4,605 0 0 1,254 0 0 0 607 875 25,950 0 187 20,099 255 0 4,193 0 44 105,700
Ltd 85
6 Heirs 17 8,503 829 195 1,059 0 0 0 0 0 0 0 0 1,923 0 0 1,274 5,190 0 723 0 243 19,939
Holdings
Oil and
Gas
Limited
7 MPNU 67, 303,570 6,893 436 21,180 0 0 562,470 10,883 9,455 0 39,521 6,679 39,765 0 1,436 32,607 2,692 0 0 0 6,949 1,044,536
68,
70
&
104
8 SEPLAT 4, 84,381 8,870 641 15,067 0 0 3,475 6,996 1,960 0 12,160 0 19,085 0 385 14,398 591 0 9,515 0 64 177,589
PETROLEU 38,
M 41
DEVELOP &
MENT 53
COMPANY
FULL
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Nigeria
Initiative
Industries
Extractive
Transparency
Earn (PAYE) FIRS

Earn (PAYE) STATES
-
-

NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Signature Bonus
Education Tax
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Pay As You
Pay As You
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures (JV)
17,
20-
23,
25,
27,
28,
82
31-
33,
35,
36,
43,
45,
46,
74,
77,
79
10 TotalEnerg 58, 287,683 5,092 293 5,710 0 0 208,008 15,709 17,500 0 11,387 15,12 50,643 0 1,649 54,428 0 0 0 0 2,083 675,312
ies EP 99, 6
Nigeria 100
Limited ,
(TEPNG) 102
,
112
/11
7,
136
Total- JV 1,488,72 61,734 4,609 71,403 10 0 958,622 107,773 54,308 22,87 142,474 41,46 291,399 219,181 6,015 301,451 10,802 1,838 116,964 0 21,768 3,923,412
7 6 0
Production
Sharing
Contract
(PSC)
1 Addax 123 83,511 0 267 16,748 0 0 76,104 0 2,518 0 3,221 1,161 5,255 0 30 3,479 323 0 3,269 0 4 195,890
Petroleum &
Dev. Nig. 124
Ltd
2 Addax 126 0 0 0 58 0 0 0 0 610 0 1,374 180 506 0 0 748 0 0 0 0 0 3,476

Petroleum
Exploratio
n
FULL
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Nigeria
Initiative
Industries
Extractive
Transparency
Earn (PAYE) FIRS

Earn (PAYE) STATES
-
-

NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Signature Bonus
Education Tax
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Pay As You
Pay As You
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures (JV)
3 Enageed 148 0 0 0 0 0 0 0 60 0 0 0 0 1,949 0 0 0 0 0 0 0 0 2,009

limited
4 Equinor 128 224,016 544,364 195 0 0 0 343,179 0 10,369 0 6,096 50 26,131 0 236 802 10 0 0 0 6 1,155,453
Nigeria
83
5 Esso E & P 138 175,030 0 495 15,954 460 0 0 0 5,507 0 7,800 467 3,685 0 237 2,245 7 0 0 0 0 211,887
Offshore
Nig Ltd
6 Esso E&P 133 304,317 0 248 12,769 0 0 275,149 0 10,807 0 7,217 1,741 7,989 0 408 7,817 0 0 0 0 775 629,234
Nig Ltd
7 Famfa Oil 127 0 0 0 0 0 0 0 0 0 0 0 0 323 0 262 418 0 0 741 0 5 1,748

Ltd
8 NAE 134 38,579 0 242 12,001 20 0 0 0 1,435 0 1,429 723 5,977 0 602 4,209 46 0 1,001 0 251 66,515
&
125
9 Nexen 138 0 0 0 0 0 0 0 0 0 0 0 0 16 0 147 1 6 0 6 0 1 177

Petroleum
Nig. Ltd
10 Panocean 147 5,560 0 299 0 0 0 100 0 0 0 0 0 150 0 0 0 0 0 0 0 15 6,124

Oil Nig
11 SEEPCO 111,545 0 58 26 0 0 0 0 0 0 500,100 813 424 0 0 315 0 0 152 0 0 613,434
12 SGORL 146 40,009 0 6 1 0 0 0 0 0 0 1,251 415 38 0 0 53 0 0 11 0 0 41,784
13 SNEPCO 118 492,225 0 481 20,457 446,502 0 404,509 0 20,428 0 23,271 3,961 29,531 0 1,157 17,139 45 0 0 0 350 1,460,056
14 Star Deep 127 272,258 0 182 25,913 0 0 572,459 0 17,132 0 10,622 1,279 20,530 0 0 12,371 53 0 0 0 0 932,798
Water
Petroleum
Ltd
15 Sterling 143 0 0 36 0 0 0 0 0 0 0 0 0 22 0 0 17 0 0 0 0 0 74
Exploratio
n Limited
FULL
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Nigeria
Initiative
Industries
Extractive
Transparency
Earn (PAYE) FIRS

Earn (PAYE) STATES
-
-

NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Signature Bonus
Education Tax
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Pay As You
Pay As You
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures (JV)
16 Sterling 0 0 22 0 0 0 0 0 0 0 0 0 31 0 0 28 0 0 0 0 0 80
Global
Exploratio
n
17 Sterling 0 0 36 0 0 0 0 0 0 0 0 0 22 0 0 0 0 0 0 0 0 58
Internation
84
al
18 TotalEnerg 130 471,935 2,871 462 3,768 0 0 315,064 8,270 55,427 0 17,878 5,567 25,731 0 1,734 77,704 0 0 0 0 72 986,484
ies
Upstream
Nigeria
Limited
Total- PSC 2,218,98 547,235 3,027 107,695 446,982 0 1,986,56 8,330 124,233 0 580,259 16,35 128,308 0 4,812 127,345 490 0 5,179 0 1,479 6,307,280
6 5 5
Marginal
Fields (MF)
and Sole
Risks (SR)
1 All Grace 17 253 0 0 299 0 0 0 60 0 0 0 0 150 0 7 27 0 0 64 0 26 886

Energy
2 AMNI 112 20,569 0 75 6,318 0 0 740 0 310 0 71 0 4,932 0 191 6,211 42 0 4 0 5 39,470
Internation &
al 117
3 Brittania-U 90 832 0 0 0 0 0 0 0 22 0 182 0 1,213 0 30 117 2 0 8 0 2 2,408
4 Chorus 56 290 9 0 1,256 0 0 8 331 5 0 0 0 239 0 7 156 0 0 20 0 54 2,374

Energy
5 CNOOC 130 0 0 0 0 0 0 0 0 0 0 14,555 0 121 0 2,297 109 29 0 316 0 15 17,442
6 CONOIL 59 43,190 0 563 5 0 0 17,638 0 0 0 500 500 854 0 0 261 0 0 0 0 0 63,511

FULL
Report
Nigeria
Initiative
Industries
Extractive
Transparency
Earn (PAYE) FIRS

Earn (PAYE) STATES
-
-

NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Signature Bonus
Education Tax
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Pay As You
Pay As You
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures (JV)
7 Continenta 59 35,085 0 146 35,085 0 0 21,310 0 0 0 500 0 0 0 0 132 0 0 0 0 0 92,259

l Oil
8 Dubril Oil 96 0 0 0 0 0 0 0 13 0 0 88 0 15 0 0 1 0 0 0 0 0 116
85
9 Elcrest 40 18,561 0 0 0 0 0 0 0 0 0 0 40 3,591 0 35 2,904 136 0 0 0 71 25,338
Exploratio
n
10 Energia 56 2,387 0 0 4,320 0 0 1,370 0 297 0 185 265 2,322 0 0 1,506 129 0 437 0 12 13,229
Limited
11 Excel 46 441 0 0 4 0 0 209 0 0 0 0 0 318 0 16 392 0 0 0 0 27 1,407

Exploratio
n
12 First 26 18,480 0 0 0 0 0 0 20 1 0 0 0 712 0 98 201 12 0 1,540 0 6 21,071

Hydrocarb
on
13 Frontier 13 660 0 0 401 0 0 0 0 0 0 612 4 1,738 0 25 1,106 124 0 385 0 5 5,061
14 Green 11 1,660 0 0 472 10 0 1,006 0 106 0 750 0 109 0 63 103 0 0 124 0 7 4,410
Energy
15 Lekoil 1,182 0 0 330 0 0 499 0 337 0 0 0 152 0 34 5,222 0 0 0 0 0 7,756
16 Midwester 56 8,300 0 0 2,300 0 0 0 0 547 0 0 317 10,925 0 358 6,708 0 0 0 0 30 29,485

n Oil &
Gas
17 Millenium 11 0 0 0 0 0 0 0 0 0 0 0 0 72 0 0 24 0 0 0 0 0 96
Oil & Gas
18 Moni Pulo 114 6,311 0 70 94 0 0 0 0 0 0 1,000 2 821 0 41 808 12 0 44 0 224 9,428

Ltd
19 NAOC 60, 66,099 7,506 0 7,229 0 0 23,141 41,135 3,472 2,397 6,836 3,367 24,834 0 286 35,576 936 0 0 0 5,150 227,965
61,
62
&
63
FULL
Report
Nigeria
Initiative
Industries
Extractive
Transparency
Earn (PAYE) FIRS

Earn (PAYE) STATES
-
-

NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Signature Bonus
Education Tax
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Pay As You
Pay As You
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures (JV)
20 NDPR 54 4,149 516 0 40 0 3,100 0 63 32 0 769 445 3,197 0 117 2,841 67 0 0 0 51 15,387
21 ND- 34 32,200 11,935 0 0 0 0 9,877 29,825 3,250 0 0 0 297 0 73 1,215 512 0 0 0 25 89,209
Western
86
22 Neconde 42 133,584 0 0 0 3 0 0 0 0 0 0 0 50 0 45 38 43 0 0 0 0 133,763
Energy
23 Network 13 876 0 0 317 0 0 0 0 0 0 0 0 141 0 40 67 14 0 0 0 0 1,456

Exploratio
n&
Production
24 Newcross 24 37,479 0 24 0 11 0 0 40 59 0 775 0 1,438 0 0 954 0 0 0 0 196 40,976

E&P Ltd
25 Newcross 67 0 0 0 0 0 0 1,200 0 0 0 200 0 71 0 0 76 0 0 125 0 0 1,672

Petroleum &
Limited 115
26 NPDC 26, 391,870 1,962 324 0 0 40,000 53,651 55,000 0 0 17,454 1,977 29,903 0 0 25,172 0 0 0 0 0 617,313
30,
34,
40,
42,
65,
60-
63,
111
,
116
,
119
,
(4,3
8,4
1)
27 Oando Oil 60, 33,479 5,487 0 4,904 0 0 0 0 0 0 0 0 0 0 95 0 0 0 0 0 0 43,966
Ltd 61,
62
&
63
28 Oriental 15,166 0 0 937 300 0 3,805 0 743 1,289 1,305 1,429 8,234 0 270 5,577 0 0 0 0 0 39,057
Energy
FULL
Report
Nigeria
Initiative
Industries
Extractive
Transparency
Earn (PAYE) FIRS

Earn (PAYE) STATES
-
-

NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Signature Bonus
Education Tax
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Pay As You
Pay As You
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures (JV)
29 Pillar Oil 56 1,191 0 0 207 0 0 4,360 0 181 0 269 176 1,201 0 87 826 22 0 0 0 34 8,555
30 Platform 38 1,759 47 0 2,951 0 0 0 1,120 131 0 254 122 1,069 0 71 750 0 0 0 0 60 8,334
Petroleum
Ltd
87
31 Prime 127 127 0 0 0 0 0 0 0 0 0 0 0 3 35 0 152 16 0 0 0 0 0 207
32 Prime 130 130 0 0 0 0 0 0 0 0 0 0 0 2 16 0 762 1 10 0 0 0 258 1,049
33 Shoreline 30 30,000 0 0 0 0 0 0 604 0 0 0 0 92 0 77 591 0 0 1,336 0 15 32,714

Natural
Res. Ltd
34 South 130 0 0 97 0 0 0 0 0 0 0 0 0 621 0 535 647 0 0 0 0 9 1,909

Atlantic
Pet.
Limited
35 Summit 142 0 0 0 0 0 0 0 0 0 0 0 0 109 0 0 74 0 0 0 0 6 189
Oil
36 Suntrust 56 0 0 0 0 0 0 0 0 0 0 0 0 10 0 0 1 0 0 0 0 10 21
Oil
37 Texaco 128 0 0 0 0 0 0 0 0 0 0 0 2 124 0 0 33 10 0 0 0 258 428

Nig. Outer ,
Shelf Ltd 129
132
38 Universal 14 1,467 0 0 280 0 0 0 0 0 0 146 95 204 0 0 134 0 0 201 0 0 2,526
Energy Ltd
39 Watersmit 16 700 0 0 1 0 0 1,914 0 387 0 175 0 567 0 11 2,361 0 0 0 0 0 6,116

h
Petroman
40 Yinka 113 3,032 0 0 2,310 120 80 0 0 1,305 0 0 16 646 0 36 249 0 0 0 0 7 7,801

Folawiyo
Petroleum
TOTAL MF 911,256 27,462 1,299 70,061 444 43,180 140,729 128,210 11,184 3,686 46,627 8,762 101,144 0 5,861 103,187 2,102 0 4,604 0 6,562 1,616,360
& SR
FULL
Report
Nigeria
Initiative
Industries
Extractive
Transparency
Earn (PAYE) FIRS

Earn (PAYE) STATES

-
-
NNLG - Dividend
Royalty (Oil)
Royalty (Gas)
Concession Rental
Gas Flare Penalty
Signature Bonus
Education Tax
NDDC Levy
NCDMB Payments
Value Added Tax
Transportation Fee
NESS Fees
Pay As You
Pay As You
Total
License
Covered Entities
$'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000) $'(000)
Ventures (JV)
Others
88
1 AENR 116 0 0 0 0 0 0 0 1,175 78 0 0 105 13 0 1 4 0 0 0 0 0 1,377
2 NLNG 0 0 0 0 0 0 0 330,877 35,933 0 27,658 0 44,623 0 0 155,396 426 0 0 722,596 0 1,317,509
3 NNPC 222,792 0 0 0 0 0 308,146 36,227 0 0 0 0 0 0 0 0 0 0 0 0 1,215,144 1,782,309
Total - 222,792 0 0 0 0 0 308,146 368,279 36,011 0 27,658 105 44,636 0 1 155,400 426 0 0 722,596 1,215,144 3,101,194
Others
Summary
Total - JV 1,488,72 61,734 4,609 71,403 10 0 958,622 107,773 54,308 22,87 142,474 41,46 291,399 219,181 6,015 301,451 10,802 1,838 116,964 0 21,768 3,923,412
7 6 0
Total - PSC 2,218,98 547,235 3,027 107,695 446,982 0 1,986,56 8,330 124,233 0 580,259 16,35 128,308 0 4,812 127,345 490 0 5,179 0 1,479 6,307,280
6 5 5
Total - MF 911,256 27,462 1,299 70,061 444 43,180 140,729 128,210 11,184 3,686 46,627 8,762 101,144 0 5,861 103,187 2,102 0 4,604 0 6,562 1,616,360
& SR
Total - 222,792 0 0 0 0 0 0 332,051 36,011 0 27,658 105 44,636 0 1 155,400 426 0 0 722,596 1,215,144 2,534,029
Others
Total 4,841,760 636,430 8,935 249,159 447,436 43,180 3,394,061 612,593 225,736 26,562 797,019 66,683 565,487 219,181 16,689 687,382 13,819 1,838 126,747 722,596 1,244,952 14,948,247
FULL
Report
Nigeria
Initiative
Industries
Extractive
Transparency
FULL
Report
4.5. Summary of Revenue Collection from the Oil and Gas Sector
The total revenue from the oil and gas sector in 2021 from the 23 revenue streams was US$
23,046,088,000 and the breakdown of the collections is shown in Table 44 below. There was
an increase of 12.82% in total revenue collections when compared with the 2020 revenue of
US$20,430,387,000. Total collections from sales of crude oil, gas and feedstock was
$12,560,268,000 representing 54.50% of the total collections compared to 52.78% in 2020.
There was an increase in in-kind payments from US$2,191,281,000 in 2020 to

US$3,895,261,000 in 2021. This increase of 77% was as a result of more production from
PSC operations and other alternative funding arrangements than cash call funded JVs.
Nigeria
Extractive
Industries

Initiative
FULL
Report
Table 44 - Summary of Revenue Collection from the Oil and Gas Sector
2021 2020
Description US$ 000 US$ 000 %
Change
SALES OF FEDERATION CRUDE OIL AND GAS
Proceeds from the sales of Federation Export crude oil 10%
(Less Royalty & taxes paid by NNPC on behalf of the 4,798,817 4,373,676
Federation)
Proceeds from the sales of domestic crude oil 5,851,714 5,026,027 16%
Proceeds from the sales of profit oil 90,470 161,061 -44%
Proceeds from the sales of Federation equity gas 648,441 713,391 -9%
Proceeds from the sales of Feedstock 603,661 508,917 19%
Total Sales of Federation Crude Oil and Gas (i) 11%
11,993,103 10,783,072
*PSCs / MCAs In-Kind Payments

Petroleum Profit Tax - PSCs 1,515,287 1,192,013 27%
Royalty (Oil) - PSCs 1,946,728 582,358 234%
Concession rentals- PSCs 2,606 183 1324%
Petroleum Profit Tax - SC 20,913 - 100%
Royalty (Oil) - SC 13,119 - 100%
Petroleum Profit Tax- MCAs 115,574 248,419 -53%
Royalty Oil – MCAs & RA 262,536 153,426 71%
Company Income Tax (CIT) Feedstock- MCAs 8,989 10,096 -11%
Royalty Feedstock – MCA 2,255 2,575 -12%
EDT Feedstock- MCA - 1,579 0%
EDT Oil- MCA 7,254 632 1048%
Total PSCs /MCAs/ Other in-Kind Payments (ii) 78%
3,895,261 2,191,281
Subtotal (A)=(i)-(ii) -6%

8,097,842 8,591,791
Other Specific Financial Flows to the Government

Petroleum Profit Tax 3,394,061 3,273,564 4%
Royalty (Oil) 4,841,760 4,639,138 4%
Royalty (Gas) 636,430 277,690 128%
Flare Gas Payment (FGP) 249,159 256,985 -3%
Concession Rentals 8,935 9,873 -9%
Miscellaneous Income 1,244,952 293,687 324%
Transportation Revenue 219,181 121,178 81%
Signature Bonus & License Renewal 490,616 333,858 47%
Total Other Specific Financial Flows to Government (iii) 11,085,096 9,205,973
20%
Other Flows to Government

Company Income Tax 612,593 268,839 128%
Value Added Tax 565,487 491,581 15%
Dividend from NLNG 722,596 545,133 33%
Capital Gain Tax 26,562 54,413 -51%
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Table 44 - Summary of Revenue Collection from the Oil and Gas Sector
2021 2020
Description US$ 000 US$ 000 %
Change
Withholding Tax 701,201 436,134 61%
Education Tax 225,736 404,011 -44%
Total Other Flows to Government (iv) 2,854,174 2,200,111 30%
Subtotal (B)=(iii)+(iv) 13,939,271 11,406,084 22%
Flows to other Entities

Niger Delta Development Commission (NDDC) 3% Levy 797,019 289,676 175%
Nigerian Content Development and Monitoring Board 66,683 77,475 -14%
(NCDMB) Levy
NESS Fee 16,689 65,349 -74%
Pay as You Earn (States) 128,585 12 10714
41%
Subtotal (C) 1,008,976 432,512 133%
Grand Total (A)+(B)+ (C) 23,046,088 20,430,387 13%
The sum of US$23.046billion, which represents the total crude oil and gas revenue shown in
the Table above, was expected to be remitted to the Federation for 2021. However, NLNG
dividend of US$722.596million, miscellaneous revenue of US$859,583 and transportation
revenue of US$24.332million which all form part of the total revenue reported were not
remitted to the Federation Account.
In addition, a total sum of US$4.786million out of the sum of US$797.019million shown in

the Table above as NDDC levy was reconciled with CBN, being payments made to the
Economic and Financial Crimes Commission (EFCC) that carried out recovery on behalf of
NDDC in 2021. Companies also confirmed that NDDC payments were made into the account
of EFCC for subsequent periods from 2021.
There was no disclosure of volumes of transported commodities through the pipelines in

accordance with EITI requirement. However, some information on crude handling charges
and tariffs were provided but the information was inadequate for an independent
computation of crude transportation fees. See Appendix 16 for details.
4.6. Ten-Year Trend of Total Financial Flows

The total amount of revenue received from the Oil and Gas Sector in 2021 was
US$23.046billion, which is about 12.82% higher than that of 2020. Table 45 below shows
the trend of total financial flows from 2012 to 2021.
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Table 45 - Ten-year Aggregate Financial Flows

YEAR 2012 2013 2014 2015 2016 2017 2018 2020 2021 TOTAL
2019
US$' B US$' B US$' B US$' B US$' B US$' B US$' B US$' B US$' B US$’ B US$' B
Total 62.844 58.080 54.555 24.791 17.055 20.988 32.62 34.21 20.430 23.046 348.633
6 8
Change ($’ (5.598 (4.764 (3.525 (29.764) (7.736) 3.933 11.63 1.592 (13.789 2.616 -
billion) ) ) ) 8 )
% Change -8.18% -7.58% -6.07% -54.56% -31.20% 23.06 55.45 4.88% - 12.80%
% % 40.29%
Source: 2012-2020 NEITI Reports and NEITI 2021 Templates
4.7. Distribution of Revenues from the Oil and Gas Sector
The total sum of US$23.046billion revenue from the Oil and Gas sector was inclusive of
deductions made by NNPC from the sale of Federation crude oil and gas prior to remittance to
the Federation Account, amount unremitted by NNPC as at year end and payments made
directly to Sub-national entities. The analysis and distribution of total revenue collections is
shown in the Table 46 below;
Table 46– Analysis of Total Revenue and Remittance to the Federation

ANALYSIS OF TOTAL REVENUE COLLECTION AND REMMITTANCE TO THE FEDERATION IN 2021
US$'000 US$'000 US$'000 %
TOTAL REVENUE 23,046,088 100%
DEDUCTIONS AT FAAC
JV Cost Recovery 3,524,190 15.29%
Pipeline Maintenance and Holding Cost 75,505 0.33%
Crude Oil and Product Losses 42,404 0.18%
Product Subsidy/Value Loss 3,030,761 13.15%
Government Priority Projects 258,425 1.12%
TOTAL DEDUCTIONS AT FAAC (A) 6,931,285 30.08%
SUB NATIONAL PAYMENTS

NDDC 797,019 3.46%
NCDMB 27,301.00 0.12%
NESS 10,724.00 0.05%
PAYE (STATES) 128,585 0.56%
TOTAL SUBNATIONAL PAYMENTS (B) 963,629
4.18%
AMOUNT UNREMMITTED BY NNPC '(C) 1,951,115 8.47%
TOTAL DEDUCTIONS (A+B+C) 9,846,029

42.72%
AMOUNT TRANSFERRED TO FEDERATION 13,200,059 57.27%
TOTAL REVENUE 23,044,126 100%
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The Table above shows the total deductions made by NNPC and approved at FAAC as
US$6.931billion. This amount includes PMS subsidy, which is described as “NNPC value loss”
in NNPC’s report to FAAC and this is in the sum of US$3.031billion (N1.16 trillion) which is
about 13.15% of total revenue or approximately 40.42% of total deductions by NNPC at
FAAC.
The total unremitted revenue in the accounts of NNPC which were mentioned earlier in
Sections 4.2 and 4.5 of this report and shown in the Table above is in the total sum of
US$1.951billion and made up of the following:
◦ US$286.423million unremitted export crude sales.
◦ US$871.145million unremitted domestic crude sales
◦ US$722.596million LNG dividend.
◦ US$859,583 miscellaneous revenue.
◦ US$24.332million transportation revenue.
◦ US$45.758million unremitted domestic gas proceeds.
The portion of total revenue that was eventually available for sharing by the Federation in
accordance with the revenue allocation formula is in the sum of US$13.200billion
representing 57.27% of total revenue collected compared to 71.70% in 2020. See figure 11
below for a pictorial representation and comparison of 2020 and 2021 revenue
distributions.
Figure 13 - Revenue Distribution
Sources: NEITI 2021 /Office of the Accountant General of the Federation / FAAC
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The amount available for the Federation Account in 2021 was shared under the subsisting
Revenue Sharing Formula in which the federal government takes 52.68%, the states, 26.72%
and the local governments, 20.60 % while 13% derivation revenue goes to the oil producing
states as a first line charge before revenue sharing amongst the three tiers of government. It is
important to note that the 13 percent derivation is supposed to be a first line charge on total
revenue in accordance with the Section 162 of Nigerian Constitution, prior to deductions
and not on balance of revenue, after deductions. The oil-producing states are Abia, Akwa
Ibom, Bayelsa, Delta, Edo, Imo, Lagos, Ondo and Rivers.
Further details on revenue allocation and disbursement can be found here . 37
Figure 14 - Federation Revenue Sharing Formula
4.8. Outstanding Liabilities Due to the NUPRC and FIRS
A compilation of outstanding financial liabilities due to the Federation from covered entities
was carried out with respect to FIRS and NUPRC revenues. The total amount payable to FIRS as
outstanding taxes as at 31st July, 2023 was US$13.591million while the total amount of
outstanding Federation revenue payable to NUPRC as at 31st December, 2022 was
US$8.251billion (See Appendix 17 for more details). Over 80% of these outstanding
liabilities are owed by NNPCL. Table 47 below shows the summary of outstanding liabilities
due to the NUPRC and FIRS.
37
Revenue Allcation and Distribution - https://neiti.gov.ng/revenue-allocation
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Table 47 - Summary of Outstanding Liabilities payable to the NUPRC and FIRS

Revenue streams NUPRC FIRS
As at 31st December, 2022 As at 31st July, 2023

(F'$) (F'$)
Oil Royalty 6,858,849,179 -
Gas Royalty 559,778,573 -
Gas Flare Payment 828,827,628 -
Concession Rental 3,050,702 -
PPT - 9,445,912.29
CIT - 532,508.59
Late Return Penalty - 75,705.56
EDT - 580,472.38
VAT - 1,354,148.39
WHT - 1,601,860.89
Total Liabilities 8,250,506,083 13,590,608.11
4.9. Observations, Findings and Recommendation

1. The total outstanding taxes payable to FIRS as at 31st July, 2023 was US$13.591million
while the total amount of outstanding Federation revenue payable to NUPRC as at 31st
December, 2022 was US$8.251billion. The non-payment of these funds as at when
due is a constraint on revenue flow to the Federation.
2. There was a collaboration between the EFCC and NDDC in the recovery of
outstanding NDDC levies. However, there will be a need for further reconciliations of
payments made by companies to EFCC to determine amounts recovered and amount
outstanding (if any) in the EFCC account because the NDDC could not provide
independent records of such payments.
3. The sum of US$7.61million from OML 116 operated by NPDC and which forms part
of the Federation export crude value was not remitted to the federation.
4. The practice of computing the 13% derivation on the balance of revenue after
deductions from total collections is contrary to the provisions of Section 162 of
Nigerian Constitution.
Recommendations
1. Companies should promptly pay outstanding liabilities while the respective
government agencies are to intensify efforts to recover the debt.
2. NNPC Ltd. should transparently disclose and account for NLNG payments in the
Corporation’s Financial Statements.
3. All revenues collected by NNPC on behalf of the Federation should be promptly
remitted into the Federation Account.
4. NNPC Ltd. and the Companies should transparently provide the basis of
transportation revenue as required by the EITI and also remit the outstanding amount
unpaid to the Federation Account.
5. NDDC should step up in its statutory role of prompt collection of NNDC levy, while
EFCC should render accounts of all NDDC levy recoveries.
6. NNPC Group should remit outstanding amount due to the Federation.
7. The practice of computing the 13% derivation on the balance of revenue after
deductions from total collections should be discontinued. Rather, the 13% derivation
should be based on total collections for the relevant period.
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CHAPTER
FIVE
CASH CALLS
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CHAPTER
FIVE
CASH CALLS
5.1. Cash-Call Management
Cash-Call is the amount paid to fund production operations in a joint venture arrangement.
The amount paid by the partners in the JV is in proportion to the individual partner’s equity
holdings as stated in the Joint Operating Agreement. The amount is paid into a Joint
Operating Account maintained by the Operator of the Joint venture. Federation’s interests in
a Joint Venture are administered by the NNPC through its upstream investment arm, the
National Petroleum Investment Management Services (NAPIMS) that is now known as NNPC
Upstream Investment Management Services (NUIMS) following the passage of Petroleum
Industry Act (PIA).
5.2. Joint Venture (JV) Partners
NNPC operates joint venture relationships with some oil companies in the exploration and
production of Nigeria’s oil reserves. NUIMS is charged with the management of the Nigerian
Federation’s investment in the Oil and Gas Joint Venture Operations with the Oil Companies
and the Nigerian oil companies.
NUIMS receive cash call funding from the government as participating interest contributions
in the Joint Venture relationship with IOCs and NOCs for exploration and production
activities.
There were 12 Joint Venture relationships with NNPC in 2021 and this is inclusive of the new
Joint Venture operation with Heirs Holdings Oil and Gas Ltd., which was introduced in 2021
with equity sharing ratio of 60% to NNPC and 40% to Heirs Holdings. The 2020 NEITI audit
reported 13 Joint Venture relationships with NNPC at the beginning of 2020 but 2 of the JVs
(Panocean and Newcross JVs) were assigned to NPDC in the course of that year.
Further details of the JV partners and their equity holdings with NNPC can be found here.
5.3. Cash Call Process
Cash-calls are based on the Annual Work Programme of each Joint Venture Operation and
covers diverse areas such as Exploration, Drilling, Production, Development, Construction,
Engineering Facilities, Technical Materials, for both crude oil and gas, in addition to
administrative overheads, referred to as OPEX.
The work programme, agreed in advance among the Joint Partners, is approved by their
Operating Committees (OPCOM) as provided in the Joint Operating Agreement ( JOA). The
OPCOM is constituted in accordance with the JOA, which is the highest decision-making
authority that is also charged with the overall supervision, control and direction of all
matters pertaining to the Joint Operations. The Technical Committee (TECOM) reviews the
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work programme and budget presented by the Joint Venture Operator and makes
recommendations to OPCOM for approval.
Cash Calls are initiated monthly by the JV Operator and served on NNPC Ltd and other
Partners early enough to enable NNPC Ltd and all Partners including the Operators to lodge
their equity portions of the Cash Calls into the JV Dollar and Naira Cash Call Bank Accounts
on or before the 1st day of the Cash Call month.
Note, the custody and transactional authority over these Joint Operating Bank Accounts rests
with the Operators and NNPC Limited has the responsibility to audit the accounts as the need
arises.
The Key processes:

a. Budget Preparation and Approval
b. Payment Process and Mandate Approval
5.3.1. NAPIMS’ Cash Call Payment Process
The NNPC cash call Payment Process as described by NUIMS are stated below:
1. Cash-Call Committee (CashCom) across various Divisions of NAPIMS and the JV
Operators, reviews monthly cash-call payables as per Cash-Call Procedure, to
ascertain each party’s cash-call obligations for the funding of JV operations.
2. After the review, Cashcom members sign-off on the agreed figures of their various
lines/Sub committees (Subcoms)
3. The JV Finance Unit collates signed figures in the cash-call summary sheet and
processes signed figures.
4. The General Manager, Finance and Accounts Department of NAPIMS prepares a
memo for the Group General Manager of NAPIMS for the endorsement of the Chief
Operating Officer (Upstream) and subsequent approval for payment by the NNPC
Group Managing Director.
5. Upon receipt of the approval of the GMD, JV Finance prepares payment Mandates to
CBN for payment of NNPC’s share of the various JV cash-call obligations.
6. CBN Pays NNPC share of the various JV cash-call obligations on receipt of NNPCs
mandate.
AF/ MCA cash-calls are also paid by the carry partner based on authorized NNPC Mandate
letter
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Figure 15 - Cash-call payment process
Outcome
NNPC JV/AF/MCA
cash call obligations
paid
Input Output
Monthly
Cashcall
cashcall
payables
Activities payment
Review, process and pay NNPC
Equity cashcall obligations in the
JV/AF/MCA models
Control Resources
JOA, OPCOM SAP solution

Approval IFRS, and Excel tools
IAS, SAS
Performance Preparation of Effectiveness and

Review of cashcall Competence
indicator Cashcall payment efﬁciency in meeting
payable obligations of personnel
schedule Cashcall obligations
Source: NUIMS
The figure above, describes the process by which disbursements are made from the NNPC
Cash Call Naira and dollar accounts to the JV Operators’ accounts.
5.3.2. Cash Call Budget for 2021
The total budget for Exploration and Production (E&P) approved by OPCOM based on Joint
Venture ( JV) work program presentations by the individual Operators was in the sum
US$7.594billion as shown in the Table below.
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Table 48 - OPCOM Approved Budget for Joint Venture Operation

S/N Name of Company / Joint Venture Total OPCOM Approved Budget
Source Naira Source Dollar Equivalent Dollar @
$1/N379
₦'000 $'000 F$'000
1 AITEO
NNPC / AITEO OML 29 JV 130,772,462.16 282,723.18 627,769.25
2 AMNI
NNPC / AMNI OML 52 JV 828,004.14 1,650.18 3,834.89
3 BELEMA
NNPC / BELEMAOIL JV 19,644,258.35 23,661.64 75,493.45
4 CHEVRON
NNPC / CNL JV 254,461,150.00 563,510.00 1,234,911.00
5 FIRST EP
NNPC / FIRST EP OML 83 - 85 JV 45,665,796.22 141,772.65 262,262.87
6 HEIRS HOLDINGS
NNPC / HHOG OML 17 JV 35,237,016.91 108,631.54 201,605.19
7 MOBIL
NNPC / MPNU JV 254,140,333.00 724,399.00 1,394,954.00
8 SHELL
NNPC / SPDC / TEPNG / NAOC JV 425,016,564.77 1,041,194.39 2,162,933.44
NNPC / SPDC / TEPNG / NAOC / BELEMA JV 1,659,168.92 878.32 5,256.07
NNPC / SPDC / TEPNG / NAOC / SEPLAT JV 10,522,569.31 28,271.76 56,035.80
9 SEPLAT
NNPC / SEPLAT JV 15,099,344.49 37,300.12 77,139.56
10 TEPNG
NNPC / TEPNG / MPNU AMENA / KPONO UNIT 184,411,529.00 425,852.00 912,424.00
11 WAEP
NNPC / WAEP OML71 / OML72 73,273,962.10 218,239.20 411,574.20
12 EROTON
NNPC / EROTON / SAHARA / BILTON JV 35,479,811.00 73,231.00 167,391.00
TOTAL (A) 1,486,211,970.37 3,671,314.98 7,593,584.72
Non-Federation JV Budget
NPDC
NPDC - NNPC / CNL JV 2,436,175.23 4,460.72 10,888.62
OGHAREKI / OKWEFE (OML 49/38) 2,186,361.64 4,704.14 10,472.91
NNPC / SPDC / TEPNG / NAOC JV 5,393,321.98 13,065.18 27,295.58
NNPC / SPDC / TEPNG / NAOC / NPDC / SNRL (UZERE 1,902,375.77 3,941.54 8,961.00
EAST)
NEWCROSS
NNPC / NEWCROSS EP JV 5,419,095.20 2,257.20 16,555.60
TOTAL (B) 17,337,329.82 28,428 74,173.71
TOTAL (A+B) 1,503,549,300.19 3,699,743.76 7,667,758.43
Source: NAPIMS/NEITI 2021 Template
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Table 48 above shows the budgeted amounts for the individual operators. However, A total
sum of US$74.173million was also budgeted for the OMLs that have already been taken over
by NPDC, making a total budget of US$7.668billion as can be seen from the Table.
5.4. Cash–Call Funding
The basis of funding of Joint Venture cash-call is provided in the Joint Operating Agreement
and contributed into the Joint Venture Account maintained by the JV operator. The
Federation’s contribution of the cash call is funded through Mandates raised by NAPIMS and
approved by the NNPC Group Managing Director. The amount is paid from the JP Morgan
Crude Oil and Gas Revenue account into the Joint Venture Naira Account maintained with
CBN and CBN JV Cash Call Dollar Account maintained with Standard Chartered Bank. The
funding process is outlined in figure 16 below:
Figure 16 - Cash-call Budgeting/Funding Process Flow Chart
Source: NUIMS
Monthly cash call payment mandates raised from NAPIMS (now NUIMS) and approved by
NNPC GMD are the source document for initiating the transfer of NNPC’s cash call
contribution from the CBN JVCC accounts into the Joint Venture Account. The monthly cash
call process is stated below:
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Figure 17- Monthly Cash-call/Expenditure Returns Process Flow Chart
Source: NUIMS
Table 49 below shows that the funds available for distribution in the Joint Venture Cash-Call
Accounts in 2021 as US$3.868billion and this is made up of US$703million balance brought
forward from 2020, Cash-Call funding by NNPC Group from Crude oil and domestic gas
accounts in the sum of US$2.858billion of which US$1.531billion was paid into the Standard
Chartered USD Account and US$1.326billion (N547.142billion) equivalent was paid into
the CBN NNPC JVCC Naira Account.
The total NNPC cash call payments to the Joint Venture Partners in 2021 was $3.087billion of
which $1.053billion was paid from the Standard Chartered USD Account and $2.034billion
(N838.977billion) equivalent was paid from the CBN NNPC JVCC Naira Account.
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Table 49 - Summary of Joint Venture cash-call bank accounts (2021)

Description CBN NNPC Joint Venture Cash Call Standard Total
Account Chartered GBP
Bulk Payment
Account
₦'000 US$'000 US$'000 US$'000
Equivalent Equivalent
A B C D=B+C
Opening Balance (a) 240,828,715.28 635,431.97 67,625.34 703,057.31
Inflow -
2021 Cash Call Funding 547,142,233.11 1,326,437.57 1,531,211.48 2,857,649.05
Cash Call Monetization 93,278,150.00 226,134.33 - 226,134.33
FEP Carry Arrangement - - 78,771.56 78,771.56
Interest - - 43.09 43.09
Reversal 114,883.12 278.51 1,663.86 1,942.37
Subtotal- Inflow (b) 640,535,266.23 1,552,850.41 1,611,690.00 3,164,540.41
Total Funds available for distribution 881,363,981.51 2,188,282.38 1,679,315.34 3,867,597.72
(c = a + b)
Outflow
Cash Call Payments 838,977,324.55 2,033,933.73 1,053,286.43 3,087,220.16
Bank Charges 1,657.40 4.02 - 4.02
Gas Infrastructural Development 5,666,869.26 13,738.20 23,492.99 37,231.19
Renewable Energy Development (RED) 626,344.80 1,518.45 - 1,518.45
Frontier Exploration Services 19,866,691.09 48,162.84 15,980.00 64,142.84
NESS 3,275,603.52 7,941.05 - 7,941.05
VAT 573,796.89 1,391.06 1,321.04 2,712.10
WHT 485,499.09 1,177.00 1,042.57 2,219.57
NUIMS Operations - - 221,283.02 221,283.02
Cash Call Monetization - - 100,000.00 100,000.00
Cleared Balance - - 261,378.52 261,378.52
Reversals 114,883.12 278.51 1,525.65 1,804.16
Subtotal - Outflow(d) 869,588,669.72 2,108,144.85 1,679,310.22 3,787,455.08
Closing Balance (e = c -d) 11,775,311.79 80,137.53 5.11 80,142.64
Sources: CBN/NNPC Joint Venture cash call Naira account, 2021 Standard Chartered Bank JVCC Dollar Account statement, NNPC 2021 NUIMS Records.
NEITI 2021 Audit Templates
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Table 49 above shows the total NNPC cash call payments to the Joint Venture Partners in 2021
as US$3.087billion and of which US$1.053billion was paid from the Standard Chartered
USD Account and US$2.034billion (N838.977billion) equivalent was paid from the CBN
NNPC JVCC Naira Account.
NAPIMS overheads cost of US$221.283million shown in the Table above is considered high
considering the position of the National Petroleum Policy gazette in December 2017.
5.5. Cash-Call to JV Operators
The total disbursements from the NNPC JVCC accounts in 2021 was US$3.087billion of
which US$1.053billion was paid from the Standard Chartered USD Account and
838.977billion (US$2.034billion equivalent) equivalent was paid from the CBN NNPC
JVCC Naira Account. However, not all payments relates to the funding of the 12 Federation
JVs as can be seen from the analysis of dollar and Naira cash call payments in Table 50 below.
Table 50 - Cash-Call Payment (US$ and NGN Bank Statement)

S/ Joint Venture Standard Chartered CBN JVCC Naira Account Total
N JVCC Account
$ ₦ Dollar equivalent F’$

($)
1 Shell 229,197,748.36 174,883,252,489.27 423,969,678.03 653,167,426.39
2 Mobil 230,091,700.00 191,744,088,106.96 464,845,421.97 694,937,121.97
3 First E & P 61,283,651.74 22,983,604,859.96 55,719,180.73 117,002,832.47
4 Seplat 17,195,470.00 5,852,838,800.45 14,189,044.10 31,384,514.10
5 AITEO 173,632,480.93 96,997,302,237.14 235,150,675.74 408,783,156.67
6 WAEP 6,255,961.27 1,856,904,099.15 4,501,694.83 10,757,656.10
7 Chevron 76,178,716.78 188,846,010,320.03 457,819,608.52 533,998,325.30
8 Eroton 20,084,639.05 13,615,091,956.91 33,007,083.70 53,091,722.75
9 Belema Oil 28,960,739.61 10,609,736,797.42 25,721,197.60 54,681,937.21
10 TEPNG 168,438,953.60 71,400,891,646.54 173,097,266.96 341,536,220.56
11 Heirs Holdings 5,099,496.21 13,775,730,606.67 33,396,520.17 38,496,016.38
12 AMNI 97,290.00 467,086,546.95 1,132,358.47 1,229,648.47
Total Disbursement to JVS (A) 1,016,516,847.55 793,032,538,467.45 1,922,549,730.82 2,939,066,578.37
Other Disbursements
1 NPDC 7,551,229.09 3,829,264,459.85 9,283,290.41 16,834,519.50
2 OML 98 SEVERANCE (Panocean) - 30,645,081,458.62 74,292,907.61 74,292,907.61
3 NPDC/Newcross 29,218,353.14 11,470,440,166.23 27,807,801.80 57,026,154.94
Other Disbursements (B) 36,769,582.23 45,944,786,084.70 111,383,999.82 148,153,582.05
Total Disbursements from JVCC 1,053,286,429.78
Accounts (A + B) 838,977,324,552.15 2,033,933,730.64 3,087,220,160.42
Source: 2021 CBN/NNPC JVCC Naira, 2021 Standard Chartered Bank JVCC Dollar Account Statements
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There are three (3) other payments from the JVCC accounts that are not related to current
Federation JVs, two (2) of which are payments related to NPDC JVs that no longer yield equity
proceeds to the Federation and the other payment is in the sum of N30.645billion described
as Panocean severance payments.
The cash-call payments to Nigeria Petroleum Development Company (NPDC) comprises

cash-call payments in respect of OMLs 20 (Shell JV), 49 and 51 (CNL JV) in which NPDC acts
as operator for capacity building purposes and OML 24 formerly operated by Newcross as a
Federation JV. The practice of providing cash call funding for Federation assets already
assigned to NPDC has resulted in accumulated cash call refunds payable to the Federation.
5.6. Cash-Call Liabilities
The total outstanding cash-call liabilities payable by the Federation, as per NAPIMS schedule
is in the sum of 120.439billion and US$507.949million. The breakdown is shown in Table
51 below compared with the total amount reported in the AFS.
Table 51 - Comparison of NUIMS Cash Call Schedule with 2021 NAPIMS AFS
NUIMS OUTSTANDING CASH-CALL FOR 2021
S/N Operators NUIMS Schedule NUIMS Annual

Report and FS
₦'000 $'000 ₦'000 Total ₦'000
(A) Equivalent (B) ₦'000 (A + B)
1 SHELL 14,746,189.76 179,343.87 73,977,554.60 88,723,744.37 1,070,374,266.00
2 MOBIL 20,511,273.67 101,925.35 42,043,188.44 62,554,462.11
3 CHEVRON 41,655,153.65 69,634.10 28,723,370.17 70,378,523.82
4 TOTAL 23,688,922.07 48,454.34 19,986,931.96 43,675,854.04
5 NPDC 1,078,919.14 3,024.41 1,247,537.31 2,326,456.44
6 NEWCROSS 1,265,316.39 5,991.55 2,471,452.61 3,736,769.00
7 FIRST E&P 3,245,562.99 20,810.69 8,584,202.99 11,829,765.97
8 EROTON 2,556,648.93 7,032.91 2,901,003.87 5,457,652.80
9 AITEO 5,515,734.33 27,015.33 11,143,554.52 16,659,288.85
10 BELEMA 2,866,650.91 2,475.22 1,021,003.88 3,887,654.79
11 SEPLAT 2,156,622.72 5,396.39 2,225,957.56 4,382,580.28
12 WAEP 1,078,207.73 2,454.48 1,012,448.67 2,090,656.40
13 AMNI 118,379.74 737.54 304,227.30 422,607.04
14 NUIMS - 33,652.32 13,881,245.48 13,881,245.48
OVERHEADS
Total 120,483,582.03 507,948.51 209,523,679.34 330,007,261.37 1,070,374,266.00
Source: NUIMS/NEITI 2021 templates and NUIMS Annual Report and Financial Statements.
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* The CBN ruling rate as at the closing period (31st December 2021) was 412.5. Therefore,
the exchange rate of 412 as at 31st December 2021 (cut-off) period was adopted to
translate Cash-call liabilities as at 31st December 2021.
The audit was unable to reconcile the cash call liabilities in the templates submitted by
NUIMS with the figures stated in the 2021 NAPIMS Annual report and financial statements.
Pre-2016 Cash Call Liability
NUIMS reported that the total arrears of pre-2016 cash call repayments as at 31st December
2021 was US$1.012billion as shown the Table 52 below.
Table 52 – Pre-2016 JV Cash Call repayment Arrears

PRE 2016 JV ARREARS REPAYMENT TO JV PARTNERS AS AT DECEMBER 2021
Company Funding Arrangement Total Negotiated Outstanding Total Arrears Total Outstanding Arrears
Debt Balance in 2020 Repayment in 2021 as 31st December 2021
EQ.$'M EQ.$'M EQ.$'M EQ.$'M
SPDC EF- SANTOLINA 1,372.51 917.21 322.1 595.11
MPNU CASH CALL-FINANCED 833.75 - - -
CNL EF- FALCON & CHEETAH 1,097.51 55.50 55.50 -
TEPNG CASH CALL- FINANCED 610.97 246.29 81.68 164.61
NAOC CASH CALL- FINANCED 774.66 360.34 108.29 252.05
TOTAL 4,689.40 1,579.34 567.57 1011.77
Sources: NUIMS/NEITI 2021 templates
5.6.1. Cash Call Receivables from NPDC
The practice of providing cash call funding for Federation assets already assigned to NPDC
which has resulted in accumulated cash call refunds payable to the Federation remains an
issue in 2021 as can be seen from Section 5.5 above. As at 31st December 2021, Cash Call
Receivables from NPDC with respect to NPDC NAOC and NPDC Newcross assets are
N287.55billion and N42.14billion respectively. This is as reported by NAPIMS 2021 AFS. No
detailed breakdown was provided by NUIMS on these outstanding liabilities as at the time of
this report.

The audit revealed that NAPIMS represented the Federation in 12 Joint Ventures with at least
50% equity interest in each Joint Venture. It was further observed that:
1. NAPIMS continues to pay cash calls to Newcross, despite the fact that Federation
interest has been transferred to NPDC. Cash call payments to the tune of
N11.40billion and US$29,218million were made by NAPIMS in 2021 with respect to
asset already transferred to NPDC since 2019.
2. Cash Call payment to the tune of US$16.835million was made by the Federation with
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respect to other NPDC managed assets from which revenue proceeds does not accrue
to the Federation.
3. The sum of US$74.294 was paid as severance from cash call account for Panocean JV
in 2021 that had been taken over by NPDC in 2020.
4. In addition to cash call, NAPIMS also incurred overheads cost to the tune of
US$221.283million. This is considered high considering the position of the National
Petroleum Policy gazette in December 2017.
1. The implication of the above is that the Federation is funding assets that do not
give corresponding returns.
2. The high NAPIMS overhead cost reduces profitability of Federation equity
investment in Jvs.
Recommendations
1. NNPC Ltd should stop the practice of funding assets transferred to NPDC from
Federation cash call account.
2. There is the need to carry out independent reconciliation of outstanding amounts due
to the Federation as part of a comprehensive reconciliation of debts outstanding
between NNPC Group and the Federation, especially with the advent of PIA.
3. It is expected that whenever assets in a JV is taken over, it should also include liabilities.
NNPC should provide the basis for TMC decision to place the entire liability (legacy &
community contractors' payments and severance obligations to staff) on the
federation alone.
4. There is need to carry out value for money audit and full implementation of the PIA is
expected to address the issue.
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SIX
DOWNSTREAM OPERATIONS
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DOWNSTREAM OPERATIONS
The downstream sector involves operations such as refining of crude into its various
components, importation of refined products, storage, distribution and marketing. These
activities are carried out after exploration and production. The Nigeria National Petroleum
Company Limited (NNPCL) is the largest player in the downstream industry through its
subsidiaries, the Petroleum Products Marketing Company (PPMC), the Nigerian Pipelines
and Storage Company Limited (NPSC) and the refineries. The PPMC oversees the supply of
crude to refineries while the NPSC facilitates the operation of pipelines, depots and product
distribution in the country.
6.1. Domestic Crude Allocation and Utilization
Domestic crude allocations are deliveries to NNPCL for downstream operations. The crude oil
is expected to be delivered to the local refineries. However, due to the lack of refinery
capacity, the domestic crude is exported under a Direct Sales and Direct Purchase (DSDP)
agreement. The total domestic crude allocation in 2021 was 94.225 million barrels.
Table 53 - Monthly Domestic Crude Allocation

MONTH REFINERY SUPPLY DIRECT SALE DIRECT PURCHASE
(BBLS) (BBLS)
JAN 0 5,742,087.00
FEB 0 7,540,744.00
MAR 0 7,553,150.00
APR 0 6,634,520.00
MAY 0 10,464,616.00
JUN 0 8,481,718.00
JUL 0 8,563,782.00
AUG 0 4,740,015.00
SEP 0 11,496,339.00
OCT 0 7,666,825.00
NOV 0 7,244,723.00
DEC 0 8,096,386.00
TOTAL 0 94,224,905.00
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Figure 18 shows the five (5) year trend of total domestic crude allocations.
Figure 18 - Five-Year Trend of Domestic Crude Allocation
QUANTITY IN MILLION BARRELS
120 110.46
104.48
100 94.05 94.22
80 72.83
60
40 26.45
20 13.58
1.9 4.74 2.76
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
2017 2018 2019 2020 2021
Refinery Delivery Unprocessed Crude Offshore processing Crude Product Exchange DSDP
6.1.1. Subsidy Regime for Premium Motor Spirit (PMS)
The PMS subsidy, also called under-recovery of imported PMS, is an arrangement where the
government pays for the shortfall in the price of imported PMS petroleum products, making
it possible for the NNPC to sell to the public at the government-regulated price(s). There is a
subsidy because the Nigerian Government fixes the price of PMS for consumers far below
cost recovery and uses government resources to pay for the difference.
NNPC, being the supplier of last resort of PMS, has over the years, adopted various products
importation arrangements such as Direct Product Importation, Off-shore Processing
Arrangements (OPA), and Exchange of Crude Oil for Products Arrangement (SWAP), and in
the recent past, the Direct Sale, Direct Purchase (DSDP) Arrangement was introduced.
6.1.2. Direct Supply Direct Purchase (DSDP) Arrangement
NNPC delivers monthly crude oil lifting on Free on Board (FOB) basis to suppliers, who in
return deliver petroleum products of Nigerian standard specification to NNPC on Delivered
at Place (DAP) basis, at designated safe port(s) in Nigeria. The PMS to be delivered by the DSDP
off-takers ought to be equivalent in value to the Crude Oil received from NNPC. Tables 54 and
55 analyse the dollar value of the “Direct Sales” or domestic crude export and then compares
with the dollar value of the “Direct Purchase” or importation of finished products. The
essence of this comparison is to confirm whether the values are the same.
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Table 54 -2021 Monthly Analysis of DSDP Crude Oil Export (Volume and Value)
MONTH VOLUME (BBLS) VALUE (US$)
JAN 326,134,455
5,742,087
FEB 486,649,035
7,540,744
MAR 487,032,696
7,553,150
APR 434,846,520
6,634,520
MAY 715,674,801
10,464,616
JUN 625,026,379
8,481,718
JUL 630,070,443
8,563,782
AUG 338,725,824
4,740,015
SEP 871,145,012
11,496,339
OCT 644,159,185
7,666,825
NOV 588,067,437
7,244,723
DEC 639,049,003
8,096,386
TOTAL 94,224,905.00 6,786,580,791
Source: NNPC 2021 Crude Oil Sales Report
Table 55 -2021 DSDP Monthly Product Received (Volume and Value)

Month Product No. of Vessels Outturn QT (MT) Value (US$)
Jan PMS 28 1,251,713 639,135,316
Feb PMS 28 1,276,523 722,072,756
Mar PMS 30 1,424,335 931,882,346
Apr PMS 29 1,659,480 1,105,927,017
May PMS 22 1,153,627 771,365,135
Jun PMS 28 1,482,874 1,013,532,178
Jul PMS 29 1,480,555 1,089,151,208
Aug PMS 25 1,300,722 950,009,005
Sep PMS 20 1,130,652 810,256,597
Oct PMS 22 1,192,284 981,295,370
Nov PMS 33 1,831,147 1,612,140,182
Dec PMS 23 1,228,946 978,957,320
Total PMS 317 16,412,859 11,605,724,430
From Tables 54 and 55 above, the total dollar value of DSDP crude sales in 2021 was US$
6,786,580,791 while the total dollar value of product received was US$ 11,605,724,430.
This gives us a difference of US$ 4,819,143,639. NNPC did not give a reason for this variance.
6.1.2.1. PMS Subsidy and DSDP Under-Recovery in 2021

Under-recovery which is sometimes referred to as value loss by NNPC, is the difference
between the cost of supplying the PMS and the price at which the product is transferred to the
customers. This difference is paid by the government as a subsidy. NNPC typically makes
deductions of subsidy from domestic crude sales, prior to remittance of funds to the
Federation Account.
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Table 56 -Total Subsidy for 2021

Month Product Under
Recovery/ Value Loss/ Subsidy (Naira)
Mar PMS 25,374,228,794.87
Apr PMS 60,396,474,465.87
May PMS 61,966,456,903.74
Jun PMS 126,298,457,944.36
Jul PMS 164,337,097,352.49
Aug PMS 103,286,281,752.62
Sep PMS 173,131,639,213.61
Oct PMS 149,283,084,869.20
Nov PMS 163,709,314,928.61
Dec PMS 131,400,236,846.95
Total PMS 1,159,183,273,072.32
In 2021, total under recovery approved by the Federation Accounts Allocation Committee
(FAAC) was NGN1.78 trillion however, the amount actually deducted at FAAC was for
N1,159,183,273,072.32. The 2021 deductions was 767% higher than the amount charged
in 2020 (N133,739,479,395.15). NAPIMS, in its 2021 AFS, claimed that the significant
increase in cost of under recovery as compared to the last period was because, crude oil price
fell significantly in 2020, leading to low landing cost in several months (April, May, July –
December 2020).
NEITI oil and gas industry audits revealed that between 2006 and 2021, a total sum of
N8.149trillion has so far been expended on petroleum subsidy, now referred to as under-
recovery. See annual breakdown of the Table below.
Table 57 -Petroleum Subsidy Payment Trend (2006-2021)

YEAR AMOUNT (N'Billion)
2006 219.72
2007 236.64
2008 360.18
2009 198.11
2010 416.45
2011 1,900.00
2012 690
2013 495
2014 482
2015 316.7
2016 99
2017 141.63
2018 722.3
2019 578.07
2020 133.74
2021 1,159.18
TOTAL 8,148.72
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6.2. Refinery Balances
Refinery product balance is the reconciliation of the various refined products at the three
national refineries. The summaries of crude and product balances are contained in this
Section.
6.2.1.Port Harcourt Refinery (PHRC)
Table 58 - PHRC Refinery Balance (Crude Material Balance) MBBLS

Crude Blend Opening Fresh Total Processed Transfer Total Closing Audit Variance
Stock Crude Volume in Volume to Processed + Stock Closing
Received Refinery COMD Transferred Stock
to COMD
Bonny 140,999.60
- 140,999.60 - - 133,666.20 140,999.60 7,333.40
The variance of 7,333.40 is unpumpable volume emptied from crude oil tank bottom to
Waste Water Treatment (WWT) for handover of the tanks hydrocarbon - free for
rehabilitation.
Table 59 - PHRC Refinery Balance (Finished Products) MT

Finished Opening Receipt Production Evacuation Closing Calculated Closing Stock Variance
Products Stock Stock
MIXED LPG 0 0.705 0.705 0

PMS 18.01 230 11 -211.99 222.99
HHK 10.09 9 10 -1
AGO 13.7 12 14 -2
LPFO 70.4 72 70 2
TOTAL 112.20 - - 230.00 104.71 - 117.29 221.99
Source: NEITI 2021 Template
The observed variance of 222.99MT was explained as due to the omission of import PMS
receipt of 224.73MT.
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Table 60 - PHRC Refinery Balance (Unfinished Products) MT

Unfinished Products Opening Receipt Production Internal Closing Calculated Variance
Stock Withdrawal Stock Closing
Stock
LIGHT NAPHTHA (2.280) 30.000 - - 13.000 27.720 (14.720)
NHU FEED (HEAVY NAPHTHA) 27.884 - - - 11.000 27.884 (16.884)
CRU FEED (TREATED NAPHTHA) 1.741 - - - - 1.741 (1.741)
KEROSENE SLOP 0.963 - - - 1.000 0.963 0.037
LGO-1 5.706 - - - 4.000 5.706 (1.706)
HGO-1 0.466 - 22.000 1.000 (21.534) 22.534
CDU-1 RESIDUE 22.098 - - - 21.642 22.098 (0.456)
VDU-1 RESIDUE 3.003 - - - 3.000 3.003 (0.003)
VGO 70.214 - - - 71.000 70.214 0.786
LCO 0.940 - - - - 0.940 (0.940)
DCO 2.177 - - - - - -
FUELS SLOPS 43.112 - - - 18.000 43.112 (25.112)
TOTAL 176.024 30.000 - 22.000 143.642 181.847 (38.205)

From the avove table, there is an established variance of 38.205MT (26.6%)
Table 61 - PHRC Refinery Balance (Consumption and Losses) MT

Product Opening Production Internal Closing Calculated Variance
Stock Stock Closing
Stock
Consumption FUEL OIL - LPFO 0 0.909 0.909 0 0 0
LGO 0 1.780 1.780 0 0 0
FUEL LPG 0 0 0 0 0 0
OFF GAS 0 0 0 0 0 0
SUB TOTAL 0 2.689 2.689 0 0 0
Losses GAS/GASOLINE 0 0 0 0 0
FLARED
COKE BURNT 0 0 0 0 0 0
LOSSES 0 0 0 0 0 0
SUB TOTAL 0 0 0 0 0 0
TOTAL 0 2.689 2.689 0 0 0
There was no established variance for the closing stock of consumption and losses in PHRC.
6.2.2.Warri Refinery (WRPC)

Table 62 - WRPC Refinery Balance (Crude Material Balance) (BBLS)
Crude Opening Fresh Total Processe Transfer Total Closing Audit Variance
Blend Stock Crude Volume in d to COMD Processed Stock Closing
Received Refinery Volume + Stock
Transfer
to COMD
BONNY
ESCRAVOS 209,228 - 209,228 219,410 209,228 10,182.00
URALS 209,228 - 209,228 219,410 209,228 10,182.00
UGELLI
BLEND
SEPLAT
CRUDE
SLOP 32,598 32,598 34,869 32,598 2,271.00
-
TOTAL 241,826 241,826 254,279 241826 12,453.00
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The positive variances in ESC/L and slop crude are due to water ingress.
Table 63 - WRPC Refinery Balance (Finished Products) MT

Finished Products Opening Stock Receipt Production Evacuation Closing Stock Calculated Variance
Closing Stock
LPG - 923 - 923

PMS 17,862 219,993 212,645 53,080 25,210 27,870
DPK 4,149 4,412 4,149 263
AGO 2,182 308 12,214 1,874 10,340
LPFO 10,142 58,478 10,142 48,336
CONSUMPTION 2,273 2,291 2,273 18
TOTAL 36,608 219,993 - 212,953 131,398 43,648 87,750
The variance in PMS closing stock is due to suspected water ingress/change of level in the
tanks
Table 64 - WRPC Refinery Balance (Unfinished Products) MT

Unfinished Products Opening Receipt Production Internal Closing Calculated Variance
Stock Withdrawal Stock Closing
Stock
BUTANE - - - - 923 - -923
LIGHT NAPHTHA 4,104 - - - 4878 4104 -774
NHU FEED (HEAVY NAPHTHA) 12,956 - - - 14430 12956 -1474
CRU FEED (TREATED 7,069 - - - 7096 7069 -27
NAPHTHA)
MIXED GASOLINE 2,371 - - - - 2371 2371
REFORMATE - - - - 2800 - -2800
LGO-1 10,461 - - - 10382 10461 79
VDU-1 RESIDUE 3,090 - - - 3099 3090 -9
VGO 28,257 - - - 40475 28257 -12218
LCO/DO 2,567 - - - - 2567 2567
DCO - - - 2583 - -2583
FUELS SLOPS 2,203 - - - 2162 2203 41
TOTAL 73,078 - - - 88,828 73,078 -15,750
There is an established negative variance of 15,750MT.
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Table 65 - WRPC Refinery Balance (Consumption and Losses) MT

Product Opening Production Internal Closing Calculated Varianc
Stock Stock Closing Stock e
Consumption FUEL OIL - LPFO 2,273 18 2,291 2,291 0
LGO 0 0 0 0
FUEL LPG 0 0 0
OFF GAS 0 0 0 0 0
SUB TOTAL 2,273 18 0 2,291 2,291 0
Losses GAS/GASOLINE 0 0 0 0
FLARED
COKE BURNT 0 0 0 0 0
LOSSES 0 0 0 0 0
SUB TOTAL 0 0 0 0 0
TOTAL 2,273 18 2,291 2,291 0
There was no established variance for consumption and losses from the Warri refinery.
Table 66 - KRPC Refinery Balance (Crude Material Balance) BBLS

Crude Blend Opening Fresh Total Processe Transfer Total Closing Audit Variance
Stock Crude Volume in d to COMD Processed Stock Closing
Received Refinery Volume + Stock
Transferre
d to
COMD
BONNY
ESCRAVOS 166,382 - 166,382 165,964 166,382 418.00
UGELLI BLEND 87,760 - 87,760 87,594 87,760 166.00
URALS LIGHT - - - - - -
SEPLAT CRUDE 82,474 82,474 82,321 -
- 82,474 153.00
SLOP 125,761 - 125,761 125,796 125,761
35.00
TOTAL 462,377 462,377 461,675 462,377
702.00
Variances are explained below:

◦ Final Escravos stock excludes 41 bbl due to change in parameters during end of year
dip.
◦ Final Ughelli Blend stock excludes 166 bbl due to change in parameters during end of
year dip.
◦ Final Seplat Crude stock excludes 153 bbl due to change in parameters during end of
year dip.
◦ Final Slop stock includes 1,440 bbl due to change in parameters during end of year
dip.
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Table 67 - KRPC Refinery Balance (Finished Products) MT

Finished Opening Receipt Production Evacuation Closing Calculated Variance
Products Stock Stock Closing Stock
MIXED LPG 35 - - 35 35 -
PMS 3250 237 5683 3013 2670
HHK 1670 1677 1670 7
AGO 1438 101 1324 1337 -13
60/70 ASPHALT 585 580 585 -5
KERO SOLVENT 53 52 53 -1
CONSUMPTION 7991 0 7991 -7991
TOTAL 15,022 - 338 -
- 9,351 14,684 5,333
The variances were explained as follow;

◦ Final PMS stock includes 2670MT of KRPC blended PMS in NPSC decanted PMS tanks.
◦ Difference of 7MT in HHK is due to end of year dip.
◦ Difference of negative 13MT is due to end of year dip
◦ Difference of negative 5MT is due to end of year dip.
◦ Difference of negative 1MT is due to end of year dip.
Table 68 - KRPC Refinery Balance (Unfinished Products) MT

Unfinished Products Opening Stock Receipt Production Internal Withdrawal Closing Stock Calculated Closing Stock Variance
LIGHT NAPHTHA 1127 1134 1127 -7
HEAVY NAPHTHA 37912 3239 34564 34673 109
TREATED NAPHTHA 3496 3493 3496 3
KEROSENE SLOP 185 183 185 2
LIGHT GAS OIL (LGO 1) 1929 -763 1137 1166 29
HEAVY GAS OIL (HGO -1) 252 261 252 -9
CDU-1 RESIDUE 2049 2028 2049 21
VDU-1 RESIDUE 1518 -431 1057 1087 30
VGO 3585 -2788 1129 797 -332
LCO 488 -466 18 22 4
60/70 ASPHALT 238 237 238 1
CDU-2 RESIDUE 417 410 417 7
VDU-2 RESIDUE 1609 1609 1609 0
WAXY DISTILATE + DAO 18765 18652 18765 113
EXTRACTS 96 96 96 0
PDA ASPHALT 1289 -846 515 443 -72
ABU BLEND CHARGE 6920 6919 6920 1
SLACK WAXES 1247 1247 1247 0
FUELS SLOPS 1813 1677 1813 136
MIXED INDUSTRIAL SOLVENT 404 336 32 68 36
TREATED KERO -LAB 1124 1098 1124 26
TOTAL 86,463 0 -5,294 3,575 77,496 77,594 98
Gain and loss across the products were as a result of the change in parameters during the
annual stocktaking exercise. Final stock includes 109 MT due to water drained and change in
parameters during annual stock take.
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Table 69 - KRPC Refinery Balance (Consumption and Losses) MT

Product Opening Production Internal Closing Calculated Varianc
Stock Stock Closing Stock e
Consumption FUEL OIL - LPFO 7523 4531 9705 2498 2349 149
AGO 0 763 763 0 0 0
FUEL LPG 468 0 468 468 0
OFF GAS 0 0 0 0 0
SUB TOTAL 7991 5294 10468 2966 2817 149
Losses GAS/GASOLINE 0 0 0 0
FLARED
COKE BURNT 0 0 0 0 0
LOSSES 0 0 0 0 0
SUB TOTAL 0 0 0 0 0
TOTAL 0 5294 2966 2817 149
Final Stock includes 149MT due to LFPO internal transfer.
6.3. Products Supplied (Imported)
Table 70 below shows the volume of products imported between NNPC and other marketers
as provided by NMDPRA.
Table 70 - Products Supplied (Imported)

Marketers 2021 quantity 2020 quantity Increase/Decr %
(Litres ‘000) (Litres ‘000) ease in
quantity
(Litres ‘000)
Other Oil Marketing
Companies (OMCs)
PMS 19,090,532.01 15,780,854.68 3,309,677.33 21%
DPK 42,021.70 17,219.09 -41%
24,802.61
Sub-total 19,115,334.62 15,822,876.38 3,292,458.24 21%
NNPC
PMS 3,444,531.55 4,229,261.85 784,730.30 -19%
DPK 10,781.89 10,781.89 -100%
-
Sub-total 3,444,531.55 4,240,043.74 795,512.19 -19%
Grand Total 22,559,866.17 20,062,920.12 2,496,946.05 12%
Source: NMDPRA 2021 PMS Supply
The volume of PMS imported in 2021 under the DSDP arrangement based on NNPC’s records
(16,412,859 MT) was significantly different from the volume of PMS imported as per
NMDPRA records presented in Table 70 above.
6.4. Observations, Findings and Recommendation

The volume of PMS imported in 2021 under the DSDP arrangement based on NNPC’s records
was significantly different from the volume of PMS imported as per NMDPRA records.
Implication:
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The implication of the discrepancy between NNPC and NMDPRA records indicates that there
is no independent third-party confirmation of product importation volume and subsidy
value.
Recommendation
The discrepancy in the volume of PMS imported and subsidy value should be investigated.
NNPC Response:
Work in progress
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SEVEN
INFRASTRUCTURE PROVISIONS, BARTER ARRANGEMENT,
SOCIAL AND ECONOMIC SPENDING
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SEVEN
INFRASTRUCTURE PROVISIONS, BARTER ARRANGEMENT, SOCIAL AND
ECONOMIC SPENDING
This Section of the report presents the reviews carried out on relevant disclosures on oil and
gas revenue management and expenditure relating to social and economic spending,
environmental expenditures, infrastructure provisions and SOE quasi fiscal expenditures
in 2021.
7.1. Infrastructure Provisions and Barter Arrangements
The EITI requires the disclosure of any material agreements or sets of agreements involving
the provision of goods and services (including loans, grants and infrastructure works), in full
or partial exchange for oil, gas or mining exploration or production concessions or physical
delivery of such commodities. In 2021, there were some such agreements and these were
reported in the 2021 NNPC Group AFS (Appendix 20). Some of the agreements had been in
operation prior to 2021 except for the Dangote Refinery agreement otherwise known as
Project Bison. These agreements are briefly summarized below, and further details can be
sourced from the 2021 NNPC Group AFS.
Infrastructure Provisions
There were no reported case of infrastructure works in 2021 as defined within the context of
EITI Infrastructure provisions and barter arrangements.
Barter Arrangements
Direct Sale Direct Purchase (DSDP) Arrangement
The NNPC has over the years entered into agreements with crude off-takers as part of an
arrangement to ensure availability of petroleum products. Under the DSDP arrangement,
NNPC delivers monthly crude oil lifting on Free on Board (FOB) basis to suppliers, who in
return deliver petroleum products of Nigerian standard specification to NNPC on Delivered
at Place (DAP) basis and at designated safe port(s) in Nigeria. See here for further details of the
DSDP arrangement in 2021.
Project Eagle
This is also a subsisting agreement prior to 2021 and reported in the 2020 NEITI report. It
was initially a loan of US$3billion contracted in 2012 under an agreement termed Pre-
Export Financing (PXF) and was meant to settle subsidy payments due to petroleum product
marketers in full exchange for proceeds of crude oil sales from one of the NNPC’s asset
(NPDC’s OML 119).
The PXF was in two tranches (PXF 1 & PXF 2) of US$1.5billion each. PXF 1 was reported as
fully repaid in the 2020 NPDC AFS while the balance on PXF2 was refinanced under another
agreement with Eagle Export Funding Ltd, an SPV incorporated in the Bahamas and hence the
arrangement is called “Project Eagle”. The new agreement also incorporates the settlement of
NPDC’s tax obligations to the Federal Inland Revenue Service (FIRS). The balance of this loan
as provided in the notes to the 2021 NNPC Group AFS is N432.411billion.
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Issues related to the PXF and NNPC’s response are presented in chapter 8 of this report.
NLNG Project Financing

The 2021 NNPC Group AFS reported this as an agreement entered in 2019 by NNPC with
NLNG on behalf of NPDC, through its equity holdings in NAOC, SPDC & TEPNG JVs, to
provide incremental gas supply to NLNG T1 – 6 Feedstock and in return, NLNG being the
buyer would provide an advance cash call payment (CAPEX portion) of some selected
projects as identified in the agreement. NLNG is to recover its funding as provided in the
agreement when gas supply is made to it by the seller. The agreed financing amount is
US$2.469billion with duration of 12 years as contained in the external financing agreement.
Of the US$2.469billion, US$501.6million is available to NPDC for the NAOC JV and projects
while the balance is available for the other JVs. The balance of this financing arrangement as
provided in the notes to the 2021 NNPC Group AFS is N48.969billion.
Project Bison
This is described as a Forward Sale Agreement (FSA) in the 2021 NNPC AFS. The agreement is
between NNPC and Lekki Refinery Funding Limited for the sale of 35,000 barrels per day of
NNPC’s future crude oil for the settlement of US$1.036billion (N426.2billion) funding
received to acquire 20% equity investment in Dangote Refinery and Petrochemicals Free
Zone Enterprise (DPRP FZE). The delivery of crude oil to Lekki Refinery Funding Limited is
scheduled to commence in August 2023. The balance on this financing arrangement as at the
end of 2021 is the same as the value of the transaction.
7.2. Quasi-Fiscal Expenditures
These are expenditures incurred by the SOE and its subsidiaries (the NNPC Group) on behalf
of the Federation but outside the national budget. Such expenditures as defined by EITI
includes public social expenditure such as payments for social services, public
infrastructure, fuel subsidies and national debt servicing, etc.
In 2021, the total sum expended as quasi-fiscal expenditure and deducted at FAAC,
amounted to US$6.931billion (equivalent N2.651trillion) and this is made up of the
following;
◦ JV cost recovery of US$3.524billion (N1.347trillion)
◦ Total pipeline maintenance and management costs of US$75.505million (equivalent
N28.874billion)
◦ Fuel subsidies (under-recovery and value loss) of US$3.030billion (equivalent
N1.159trillion)
◦ Crude oil/product losses of US$42.404million (equivalent N16.216billion)
◦ Government priority projects US$258.425million (equivalent N98.824billion)
All figures are as reported at FAAC during the year and converted at the 2021 CBN closing
rate of N382.41/US$
7.3. Social Expenditure
Social expenditure, in the context of EITI, can be voluntary or mandatory. Mandatory Social
Expenditures are payments made to the NDDC and the NCDMB in line with their respective
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establishment Acts, while non-mandatory social expenditures are voluntary payments made
by companies to communities or towards community development. The EITI standard
requires these expenditures to be captured in the report.
The voluntary social expenditure consists of contributions made by Companies to promote

development or fund community projects in the communities in which they operate, in
accordance with EITI Requirement 6.1. These contributions are in forms of building of
schools, construction of roads, disaster responses, electrification, drilling of boreholes, major
donations, scholarships, provision of education materials, hospitality, agricultural support
schemes (provisions of merchandised equipment, fertilizers, seedlings) etc.
The total social expenditures in 2021 amounted to US$898.18million. This includes

mandatory contributions of US$863.70million (96.16%) and non-mandatory contributions
of US$34.48million (3.84%). The mandatory contributions include NDDC’s 3% levy of
US$797.02million and NCDMB’s 1% levy of US$66.68million. Tables 71 and 72 below show
the total mandatory social contributions and non-mandatory social expenditure in 2021.
Full details of Companies’ Social Contributions can also be found in Appendix 18.
Table 71 - Summary of Mandatory Social Contributions

Arrangements NDDC (3%) NCDMB (1%) TOTAL
US$'(000) US$'(000) US$'(000)
Production Sharing Contract (PSC) 580,259 16,355 596,614
Marginal Field (MF) and Sole Risk (SR) 46,627 8,762 55,389
Joint Venture ( JV) 142,474 41,460 183,934
Others / Service Contract (SC) 27,658 105 27,763
Total 769,018 66,682 863,700
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Table 72 - Summary of Non-Mandatory Social Expenditure

Covered Entities No. of 2021 2021 2021 2021 2020
Projects Indicat
or % ∆
(A) (B) (C) Total US$
Equivalent
(A) + (B) +
(C)
S/N NGR US$ EURO US$ US$
1 Addax Petroleum 4 171,612,619 429,375 533,347 -19%

Development Nig. Ltd
2 Equinor Nig Energy Com 1 35,279,000 88,268 100.%

Ltd
3 Green Energy Int’l Ltd 7 46,499,930 116,343 100%
4 Midwestern Oil and Gas 12 1,904,565 1,904,565 100%
5 Mobil Producing Oil 9 263,418,070 659,072 1,715,372 -62%
6 Network Exp and Prod 7 29,718,500 74,356 100.0

Ltd 0%
7 Newcross E&P Ltd 5 522,056,975 1,306,187 1,381325 -6%
8 Nigeria Agip Exploration 1 20,000,000 50,040 100%
9 Nigeria Agip Oil Co Ltd 10 6,595,252,000 16,501,331 100%
10 Pillar Oil Limited 5 109,812,000 273,763 235,161 14%

11 Platform Petroleum Ltd 7 110,417,442 276,265 335,206 -21%
12 SNEPCO 31 116,500,000 291,483 525,318 -44%

13 SPDC 301 2,599,704,736 6,504,465 100%
14 South Atlantic Pet Ltd 1 27,500,000 68,805 100%
15 TotalEnergies EP Nigeria 8 3,234,068,000 773,000 8,864,643 17,371,088 -49%

Limited
16 TotalEnergies Upstream 55 2,440,216,962 497,560 488,101 7,179,324 100%
Nigeria Limited
17 Waltersmith Petroman 3 48,522,000 121,402 359,793 -196%
Total 444 16,370,578,234 3,175,125 488,101 34,482,962 22,456,610
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7.4. Contribution of the Industry to the Economy

7.4.1. Contribution to the Economy
In 2021, the sector contributed 7.24% to Nigeria’s total GDP of N173.5trillion (US$434.17
billion). This was a decrease of 11.27% compared the 2020 contribution of 8.16% of the
N152.32trillion (US$381.11). The Nigerian oil and gas industry contributed 5.9% to the total
real GDP recorded by the last quarter of 2021 and this was about 2.3% decline from the
previous quarter.
SHARE OF GDP
Quarter 2021 2020 2019
Q1 9.25% 9.50% 9.22%
Q2 7.42% 8.93% 8.98%
Q3 7.49% 8.73% 7.32%
Q4 5.19% 5.87% 9.77%
Annual Average 7.24% 8.16% 8.62%
Sources: NBS Nigerian Gross Domestic Report Q1 2022 & Nigeria: contribution oil sector to GDP 2018-2022 | Statista
7.4.2. Contribution to GDP and Exports
In relation to exports, crude oil contributed 14.40 trillion Naira (US$ 36.55 billion) of the
total export of 18.91 trillion Naira (US$ 47.31 Billion) in 2021. This represented 76.22 % of
the total exports in 2021 and a marginal increase of 0.8% compared to 2020 which was
75.42% . See Table 73 below for contributions of crude oil and gas to total export.
38
Table 73 - Contribution of the Oil and Gas Sector to Export

YEAR TOTAL EXPORT CRUDE OIL CRUDE OIL/
& GAS EXPORTS TOTAL EXPORTS
%
NGR’ million US$ million NGR’ million US$ million
2019 19,192,234.12 48,019.00 14,690,021.45 36,754.46 76.54%
2020 12,522,684.44 31,332.78 9,444,655.98 23,630.54 75.42
2021 18,907,788.71 47,307.32 14,410,769.08 36,055.77 76.22
TOTAL 50,622,707.27 126,658.10 38,545,446.51 96,440.77
Source: National Bureau of Statistics/NEITI Audit
The relatively higher export value in 2021 compared to 2020 was due to an increase in crude
oil price in 2021. The average equity crude price in 2021 is US$66.97/bbl compared to the
average price of US$41.65/bbl in 2020.
7.4.3. Contribution to Government Revenues
The total government revenue generated in 2021 was 10.75 trillion Naira , to which the oil 39
and gas sector contributed 4.358 trillion Naira. This represents about 40.55% of the total
revenue compared to 51% in 2020.
38
National Bureau of Statistics - Foreign Trade in Goods Statistics- Q4 2021.
39
CBN 2021Annual Economic report – See here
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7.4.4. Contribution to Employment
Employment data was requested from the 70 Companies (NLNG inclusive) and the SOE
covered in the 2021 Audit. Of these, 11 companies did not provide the required information
while four (4) companies are affiliated with three other companies and operating with the
same sets of employees' details of the affiliated companies is contained in Appendix 19. The
56 respondents confirmed the engagement of 19,171 employees. The data revealed that
15,639 (82%) and 3,532 (18%) of the employees were male and female respectively.
The data also revealed that 2,325 (12%) were top or high-level positions, while 11,312 (59%)
and 5,534 (29%) were middle level and the lower-level employment positions respectively.
Eighty-three percent of the employees were recruited from the local/state/ host
communities, 15% from other states, while 2% were expatriates. Tables 74 and 75 show
summaries of employment data received from the entities that populated the templates.
Table 74– Summary of Employment by Companies/NNPC (occupational level)

Description Top Middle Lower Total
Number of Male Employees 1,855 9,267 4,517 15,639

Number of Female Employees 470 2,045 1,017 3,532
Total 2,325 11,312 5,534 19,171
Table 75 – Summary of Employment by Companies/NNPC (nationality/ origin)

Description Local/ Non-Local/ Foreign Total
State/Host Other States (Expatriates)
Communities
Number of Male Employees 12,934 2,269 436 15,639

Number of Female Employees 2,896 573 63 3,532
Total 15,830 2,842 499 19,171
7.5. Environmental Impact of the Industry’s Activities
The Oil and Gas industry activities are monitored extensively to ensure the health and safety
of the environment. This Section provides information on the monitoring of the
environmental impact of the oil and gas industry. It includes legal provisions, administrative
rules and actual practices relating to the environment.
Some of the legal provisions and regulations with regards to environmental health and safety
include:
40
◦ Upstream Petroleum Environmental Regulation 2022
◦ Environmental regulations for Midstream and Downstream Operations 2022 41
◦ The Petroleum (Drilling and Production) Regulations 1969 Sections 21-25 and 36
◦ The Petroleum Regulations 1967, the Oil in Navigable Waters Decree No. 34
Regulations 1968
40
Upstream-Petroleum-Environmental-Regulations.pdf (nuprc.gov.ng)
41
Environmental-Regulations-for-Midstream-and-Downstream-Operations-draft-copy.pdf (nmdpra.gov.ng)
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◦ The Petroleum Refining Regulations 1974 Section 27, 35, 38 & 434
◦ Environmental Guidelines & Standards for the Petroleum Industry in Nigeria
(EGASPIN) 2018
7.5.1. Environment Regulatory Agencies
The two major government agencies concerned with the regulation of the environment in
relation to the upstream oil and gas industry are the Federal Ministry of Environment
including the agencies under it, and the Nigerian Upstream Petroleum Regulatory
Commission (NUPRC).
7.5.1.1. Federal Ministry of Environment (FMoE)

42
The FMoE is responsible for developing general policy guidelines for the protection of the
environment, conserving natural resources, and sustaining development. It ensures that a
quality environment conducive for good health and well-being of fauna and flora is
maintained. It also promotes the sustainable use of natural resources for the benefit of all
citizens.
The following are agencies under the FMoE that are most relevant to the oil and gas industry.
i. National Oil Spill Detection and Response Agency (NOSDRA)
The Ministry of Environment established NOSDRA and it was subsequently backed up by law
through an act of the National Assembly in 2006 as part of the initiative to administer the
National Oil Spill Contingency Plan (NOSCP) in compliance with the International
Convention on Oil Pollution Preparedness, Response and Cooperation (OPRC90) to which
Nigeria is a signatory.
NOSDRA seeks to create zero tolerance for oil spill incidents in Nigeria, as well as restore and
preserve the environment by ensuring that good practices are maintained in oil exploration,
storage and production, with the aim of achieving sustainable development. The
organization is responsible for the co-ordination and implementation of the National Oil
Spill Contingency Plan for Nigeria which includes, among others, the establishment of a
viable national operational organization that ensures a safe, timely, effective and appropriate
response to major or disastrous pollutions.
Section 19 1© and (g) of the NOSDRA Act gives the Agency the mandate to undertake post-
spill impact assessment to determine any damage or the level and intensity of damage caused
through oil spills as well as their possible long-term effects. See here . 43
Table 76 below gives a summary of oil spills in 2021 compared to 2020.
42
Federal Ministry of Environment – Website - https://environment.gov.ng
43
Oil Spill Monitor - https://nosdra.oilspillmonitor.ng
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Table 76 - Oil Spill Data Summary 2021/2020 NOSDRA Oil spill monitor
S/N DESCRIPTION QUANTITY
2021 2020
1 Available records of oil spill cases 402 433

2 Case site not visited investigation staff 32 35
3 Total oil spilled in barrels 22,735.258 21,049.577
4 Total oil spilled in litres 3,592,170.81 3,363,294.375
5 Major oil spills: 2 0
(over 250 barrels spilled into inland waters, or over 2,500 barrels spilled on land, swamp,
shoreline and open sea)
Table 76 - Oil Spill Data Summary 2021/2020 NOSDRA Oil spill monitor
S/N DESCRIPTION QUANTITY
2021 2020
6 Medium Oil spills: 5 22

(25-250 barrels spilled into inland waters, or 250-2,500 barrels spilled on land, swamp,
shoreline and open sea).
7 Minor oil spills: 252 301

(up to 25 barrels spilled into inland waters, or 250 barrels spilled on land, swamp, shoreline
and open sea)
8 Uncategorized oil spills 138 106
Source: NOSDRA website as at 24th July 2023
In 2021, Nigeria lost 22,735 barrels or 3.72 million litres of crude oil in 2021 with 410
incidents NOSDRA. (Note the figure stated as incidences are reported or resolved). This is a
22 per cent rise in incidence when compared to 18,563 barrels or three million litres
recorded in 2020 in 384 incidents. The data is limited as there were numerous pipeline
vandalization in 2021 in the Niger Delta region. A ten-year analysis according to NOSDRA is
shown below:
ii. National Environmental Standards and Regulations Enforcement Agency (NESREA)

NESREA was established through a National Assembly Act in 2007. The Agency has the
primary responsibility for protecting and developing the environment, biodiversity
conservation and sustainable development of Nigeria’s natural resources and environmental
technology including coordination and liaison with relevant stakeholders within and outside
Nigeria on matters related to enforcement of environmental standards, regulations, rules,
laws, policies and guidelines. The Federal Government, through NESREA, has developed
about 33 Environmental Regulations, which are currently in force.
One of the functions of the Agency is to enforce compliance with laws, guidelines, policies
and standards on environmental matters. Other functions of NESREA can be found here . 44
44
Functions of NESREA - https://www.nesrea.gov.ng/our-functions/
45
HYPREP Projects - https://hyprep.gov.ng/projects/
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iii. Hydrocarbon Pollution Remediation Project (HYPREP)

HYPREP was established under the Federal Ministry of Environment as published in the
Federal Government Gazette No. 176, Vol. 103 of December 2016 to achieve the objectives
listed below in Ogoniland and other impacted communities:
◦ Determine the scope, means and modalities of remediation of soil and ground water
contamination in impacted communities as may be recommended by HYPREP
Governing Council and remedy them
◦ Enhance local capacity for better environmental management and promote awareness
of sound environmental management as well as ensure livelihoods and sustainable
development
◦ Ensure security and promote peace building efforts in impacted communities
◦ Strengthen governance, transparency and accountability in the region.
The functions of HYPREP and on-going remediation works can be found here 45
7.5.1.2. Nigerian Upstream Petroleum Regulatory Commission (NUPRC)
NUPRC has the statutory responsibility of ensuring compliance with petroleum laws,
environmental regulations and guidelines in the industry. The Commission ensures that
operators in the industry do not degrade the environment during their activities (exploration,
production, and processing operations). NUPRC develops the environmental guidelines and
standards for the Petroleum Industry. The key roles involve:
a. Ensuring that all environmental concerns are integrated into major economic
decision-making process through project peer reviews
b. Ensuring environmentally friendly decommissioning, environmental remediation,
and restoration plans/costs that are built into major development projects
c. Ensuring that environmentally friendly processes and technologies are employed
through technically and scientifically sound end to end environmental and
engineering processes and reviews
d. Ensuring that Environmental Impact Assessment in mandatorily carried out before
any major development project is embarked
e. The establishment of adequate environmental standards as well as the monitoring and
evaluation of changes in the environment through tools like the environmental
evaluation studies, environmental management plans, oil spill reporting process, oil
spill contingency plan for spill response, activation, inspection and audits,
environmental sensitivity index, environmental assessment following an
environmental impact such as post impact assessment and development of remedial
action plans
f. The publication of up-to-date environmental data and dissemination of relevant
environmental information
7.5.2. NUPRC Environmental Monitoring Process
Environmental Monitoring is the series of processes, procedures and activities undertaken

with a view to ascertaining the quality of the environment. It is usually carried out in
preparation of environmental impact assessments and many other circumstances where
human, chemical and or industrial involvements have or potentially implicate harmful
45
HYPREP Projects - https://hyprep.gov.ng/projects/
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consequences on the natural environment.
NUPRC performs its role by ensuring that impact study is performed prior to the start of a new
project, during the project and when monitoring the project life cycle and the post impact
assessment when there is an incidence. Monitoring is characterized by ascertainable
strategies and programmes and it usually ends up with reports and outcomes intended to
ascertain the existing condition or status of a particular environment or to establish trends in
environmental parameters (physiochemical, life science/biological, radiological,
microbiological, social science/human environment, etc) . The results of such monitoring
are reviewed, analysed and reports produced.
At the start of the project, a risk assessment is performed. An environment risk register is
prepared to understand and collate all risks posed by the proposed project to the people and
environment, and for the approval of the project. The requirements are stated in the
regulation 46
The stages of this monitoring are illustrated below:
Figure 19: Stages of environmental monitoring
Environment
Impact Monitoring Post impact
Assessment and/ through the assessment
Environment project lifecycle monitoring
Evaluation by a
third party
Consultant
7.5.2.1. Environmental Impact Assessment Process
The process of determining an environmental impact assessment is shown in the diagram

below:
46
Upstream-Petroleum-Environmental-Regulations.pdf (nuprc.gov.ng)
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Figure 13: Environmental impact assessment process

Screening Scoping Baseline Study
Determine the need for the assessment Decide project's potential impacts Data is collected on the current state of the
Project plan is screened for the scale of (biological/social sciences etc) taking area at the current situation
investment, location, resources and the coignisance of the the scope of the project Data sent to third party laboratory (DPR
type of the project and location witnesses and a review is done by DPR and
Environmental screening report IOCs)
Impact Prediction Risk Mitigation Measures Monitoring Program
Determine the consequence of the preoject Determing how the negative consequences During and after the project there should
Determine both postive and negative can be reduced or prevented be monitoring of the environment
consequences Determine alternative that is redesign the conditions (which may be changing)
project slightly Prepare Environment
Management/Monitoring Plan
Assessment of the impacts of the project on
the environment
Screening: The concept for the project is screened or proofed. The concept must be
environmentally screened.
Scoping: The scope of the project is determined and the impacts on the environment
assessed
Baseline study: The study of the environment prior to the start of the project is documented.
This involves the following area:
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Environmental Components/Environmental Requirements

Components Samples
Physio-chemical & Noise Levels of noise present
Earth Science Strategies for reducing
noise pollution
Atmosphere Impact of the emission on
the area
Effects on air for residents
Health implications
Quantity of emission
likely from the project
Pollution control
desires/air quality
standards
Contributions to global
warming
Land Changes in land
morphology
Ground water Sustainability issues
Existing ground water
resources, their quality
and quantity within the
area
Impact of project on
water resources
Effects on local use
Surface water Sustainability issues
Effects on local use
(irrigation, drinking,
fisheries etc.)
Health implications for
users
Life Science/Biological Habitat and communities Flora and fauna in the
area
Potential/likely damage
due to project, due to
effluents, emissions, and
landscaping
Species & population Biological stress
Social Science/human Social & economic Employment
Environment opportunities
Community welfare
Health & safety Gas flaring reduction
Impact on community
safety
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Impact Prediction: The possible impact of the project is determined both positive and negative
aspects. This will help determine what the next steps are if there is an occurrence.
Risk mitigation measures: All possible risks are discussed and alternatives provided. This is
then featured in the environmental management monitoring plan. A detailed engineering
design is provided by the OC. The impacts of the projects are determined. A payment of a
financial contribution to the Environment Remediation Fund in accordance with the PIA
Section 103(1) is required before the approval of the Environment Management Plan.
7.5.2.2. Frequency of NUPRC Monitoring of Companies
NUPRC monitors Companies at various stages of the project. Certified NUPRC third party
consultants are involved in the monitoring and reporting process. Some of the reports and the
frequency of reporting are as follows:
Environmental monitoring reports and frequency

Reports Frequency
EIA/Environmental Monitoring Plan (EMP) At the start of the project

Air quality from the exhaust Weekly and report to NUPRC monthly
quarterly
Discharges from process water etc., effluents Weekly and report to NUPRC monthly/
discharged into the environment quarterly
Environmental evaluation study (EES) report Every 3years (comparison of EIA/EES
parameters)
Biological monitoring study - offshore Every 3 years
Post impact assessment report When an incidence occurs
Note: Approvals are issued after a successful completion of an EIA/EES, and the study
indicates that the environment will not be adversely impacted from the proposed project
activities after implementation of pre-determined mitigation measures and environmental
monitoring plan during the project implementation and operations phases.
7.5.2.3. Post Impact Assessment
This stage occurs when an incidence occurs due to a breach, loss of containment,
hydrocarbons, hazardous materials, spillages, are discharged into the environment.
(Upstream Petroleum Environmental Regulations 2022 - Part 1 (9)). This means that
intervention values have exceeded target values. The impact on the assets and environment
are evaluated. Remedial action study is conducted to restore the environment back to its
original state by cleaning up the spill, etc.
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Note at the award of a license, NUPRC assumes that every operator has the capacity to manage
spills.
NUPRC has categorized the spills based on volume into three tiers:
▪ Tier 1: Onshore 0 - 25 barrels, offshore 0 - 250 barrels
▪ Tier 2: Onshore 25 - 250 barrels, offshore 250 – 2500 barrels
▪ Tier 3: Onshore > 250 barrels, offshore > 2500 barrels
NUPRC expects all Operators to have the capacity to manage Tier 1 spills without assistance.
To achieve this annual OSCPFI oil spill continuous planning facility inspection are done on
Operator’s facilities and equipment’s and HSE issues. Scenarios of oil spillage are carried out
to ensure companies are prepared to combat spills, security issues, etc. The staff strength,
training, and staff deployment are analysed to ensure operators can combat a spill. This
inspection takes three to five days. This is done for all operators. Tier 2 spills are managed by a
cooperative association CLEAN Nigeria Associates. This is a collaboration of Operators to
mutually assist themselves to manage Tier 2 spill. Every Operators subscribes and pays a sum
to manage the association and respond to spill issues. Tier 3 spills require external foreign
companies to assist to respond to the spill issues. This is normally performed by NOSDRA.
Clean Nigeria Associates Limited (CNA) was established in 1981 by oil companies operating
in Nigeria as a non-profit second tier oil spill response organization. The primary objective
was to provide a pool resource of oil spill response equipment, fast and effective second tier
oil spill response capabilities, and expertise to aid members of the association in combating
oil spills as a back up to any such capability kept by individual members. CNA Oil Spill
Response equipment and materials are currently stocked in Nigeria in two main bases (Onne
and Warri) and two satellite bases (Kaduna and Eket) in Nigeria.
7.5.2.4. Remedial action
When a spill occurs due to third party interference (sabotage), company negligence, etc., the
law expects the operators to manage the spill. The Companies are expected to clean up the
spill, clean up the environment and the regulators ensure this is done. The operators take
samples for analysis to check intervention values have been exceeded. If the values have been
exceeded, then remediation takes place. This is done by certified third party NUPRC
consultants. The expectation is that the values should be reduced, and the environment
returned to its original state, in which plants, animals, etc. can survive.
7.5.2.5. Remediation
Section 81 – 84 of the Upstream Petroleum Environmental Regulations describes the

regulations of remediation and restoration of the impacted area. A project from the Federal
Ministry of Environment known as Hydrocarbon Pollution Remediation Project (HYPREP)
which is in charge of bringing the environment to its original state. This was created to
achieve environmental remediation, sustainable livelihood, provision of potable water,
Public health analysis in Ogoniland and other impacted communities.
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7.5.2.6. NUPRC Implementation Machinery for Non-Compliance
Various tools are used for enforcement of these regulations namely:
▪ Sanctions/fines (this is stated in the regulation document)

▪ Compensation (of communities, etc.)
▪ Issuance of interim guidelines on waste discharges
▪ Revocation of licenses and leases
7.5.3. Environmental Reforms
• Gas flaring management
Gas flaring is one of the age-long ills that plague the Nigerian Oil and Gas sector. It has been
attributed to unfavourable cost-benefit outcome to the operators in the sector that may
choose to harness and monetise associated gas. The cost of processing gas for sale is generally
higher than the benefits that would be derived from commercializing the processed gas. As
such, associated gas is preferred to be flared or vented by operators. Considering the
environmental impact of gas flaring, the PIA has upheld the prohibition of gas flaring, except
for a few circumstances in which there is no other reasonable option than to flare gas. This is
stated in the PIA Section 104 – 108. A licensee or lessee shall pay a penalty prescribed
pursuant to regulation issued by the Commission. The only recognized few instances where
gas flaring may be allowed by the PIA are as follows:
i. in the case of an emergency

ii. pursuant to an exemption granted by the Commission.
iii. as an acceptable safety practice under established regulations
In managing the flaring of gas and the impact on the environment, NUPRC requires upstream
operators that produce natural gas to submit, within 12 months of the effective date of the
PIA, a natural gas flare elimination and monetisation plan to the Commission. The monies
received in respect of gas flaring penalties for upstream petroleum operations are to be
utilized for environmental remediation and relief of the host communities impacted.
• Other reforms
Other industry reforms are currently on-going are stated below:
◦ Process automation/data collection, interpretation, and storage
◦ Oil and gas industry service permit
◦ Automated spill reporting platform and integrated GIS system
◦ Oil spill contingency plan/facility in asset integrity status
◦ Environmental data collection and storage
◦ Sustainability reporting system
◦ Developing guidelines for achieving methane reduction target
◦ Robust development/update of environmental guidelines and principles to reflect
current global best practices
◦ Host communities’ development trust fund (Section 235 of PIA) – this is for the host
communities needs for social, environmental and economic perspectives. The oil
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license holder (settlor) must make an annual contribution of an amount equal to 3

percent of its operating expenditure for the relevant operations from the previous
year.
◦ Environmental remediation fund (1f Section 103 of the Act) – this is for remediation
of oil-impacted sites. The regulation is awaiting official gazette.

1. In 2021, the total sum expended as quasi-fiscal expenditure amounted to
US$6.931billion (equivalent N2.651trillion). These amounts were deducted from
Federation’s revenue before remittance without appropriation by National Assembly.
2. The circumstances for the loans taken in the past to settle Marketers under the
Petroleum subsidy scheme, which are being recovered from the monthly Federation
revenue proceeds under Pre-export financing and Project Eagle agreement remains
unclear.
3. The agreement on cash call financing by NLNG involving Federation JVs requires
further clarifications.
Recommendations
1. There is the need to ensure adequate oversight over the expenditures that are not
captured in the National budget.
2. NNPC should transparently disclose details of the subsidy and the beneficiaries of
the payments, in addition to rendering accounts on the loan transaction.
3. The pre-export financing arrangement and all other loan arrangements in
exchange for crude oil and gas should be extensively reviewed / investigated.
Environment
4. Regulations - There is an overlapping of regulatory powers between the
enforcement agencies on environmental issues that is NUPRC, NMDPRA, Oil and
Gas Division of the Federal Ministry of Environment (FMOE). This could offer
companies that pollute the environment to take advantage and choose the
regulator to obey. The agency's process and or rules should be streamlined and not
overlapping.
5. Gas flaring (Gas facilities set-up or gas flaring for testing or operational reasons) –
There should be a specified limit in the contract that is allowable for facility set-up
for gas flaring. This would reduce the harm to the environment.
6. Environmental Remediation Fund – The administration of the fund should be
vested in NUPRC.
7. The procedure for assessing compensation for environmental damage should be
clearly documented and put in a public repository.
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EIGHT
OUTCOMES AND IMPACT
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EIGHT
OUTCOMES AND IMPACT
NEITI audit reports have over time provided critical information and data that have greatly
assisted in deepening discussions on transparency, accountability and good governance in
the Oil and Gas Industry. The findings and recommendations from the Report are utilized by
an Inter-Ministerial Task Team, with members drawn from the critical agencies responsible
for implementing the recommendations and remedial issues in the report.
Observations and recommendations on issues from the 2021 report are presented in the
Table below:
8.1. Observations, Findings and Recommendations of the 2021 oil and gas report
The Table below sets out a summary of the observations/findings and recommendations of
the 2021 NEITI report.
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Table 77 - Observations and recommendations for 2021

S/ Observations/ Implication Responsibility Entity’s Comments/
N Findings Response Recommendations
1. Compliance with NEITI Report Non- Companies and NEITI should take measures to
Out of the 69 companies cooperation of NEITI ensure full compliance of covered
selected, Lekoil Limited did not Lekoil in this entities with the annual audit
submit any information to IA report indicates process, in view of revenue
for reconciliation but made lack of implications to the Government. It
payments. The total payments commitment to may also be necessary for NEITI to
by Lekoil amounted to the NEITI activate its sanctions mechanisms.
US$7,756,000, representing reconciliation
0.03365% of the total revenue. process.
2. Beneficial Ownership The ultimate Companies, NUPRC NUPRC should implement the
It was observed that majority objective of and NEITI relevant Section of the PIA speedily.
of the oil and gas companies in beneficial
Nigeria exhibit complex ownership
structures that shield the real disclosure
identities of their owners. which is to
disclose the
natural persons
behind the
companies is
still a
challenge.
3. Production from PSC Blocks The PSC NUPRC and NNPC NNPCL We recommend that the NUPRC
In 2021, the following were arrangements Ltd responded that and NNPC Ltd. speedily review the
the observations: which the PSC blocks technical, operational and other
contributed transit from constraints limiting production
1. Only 12 (34%) of highest to total exploration/app from the idle PSC blocks with the
the PSC blocks production raisal phase to view of optimizing production from
recorded volumes production the PSC arrangements.
production while operated only overtime. Also
23 other blocks, 34% of the total note that some of Where these issues cannot be
representing 66% of allocated the blocks are resolved, consider revocation of
total numbers of blocks. still at award licenses and subsequent allocation
PSC blocks did not status as some to other interested parties.
produce. contractors may
not have come
forward for
2. Total production budget/work
from the PSCs, program due to
which was 242.96 various reasons
million barrels from regulatory
represents 42.92% to business
operations’
of total production
considerations.
of the
We are hopeful
566.13million that about 2-3
barrels. blocks will soon
attain
production
The PSC arrangements, which status
contributed highest to the total
production volumes operated
only 34% of the total allocated
blocks.
4. Nigeria-Sao Tome and Principe Nigeria has not JDA, NUPRC The Federal Government should
Joint Development Authority. realised the review the activities of JDZ with the
A bilateral treaty between objectives of view of identifying possible
Nigeria and Sao Tome & the treaty for challenges and proffer solutions
Principe has existed since over a decade that will enhance the realisation of
2001. In 2021, the report of the existence the objectives for which the
disclosed that there were no of the JDZ. NSTPJDA was established.
exploration, production or
export activities in the JDZ.
This lack of activity has been
the reported situation in the
past NEITI Audits.
5. Crude losses Incessant crude NNPC: We have The Federal Government should
The crude oil volume losses in oil losses in the noted NEITI's ensure proper pipeline security
2021 due to measurement industry as a recommendation surveillance using satellite imagery
errors and theft/sabotage are result of s. However, there and other sophisticated ICT tools to
31.04million barrels and theft, sabotage are recent efforts ensure real time monitoring and
37.57million barrels and metering by both the decisive actions on pipeline
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respectively. The combined errors remains Federal vandalism. The companies should
losses was 11% of the actual a major cause Government and also work with the Federal
metered production volume at of revenue NNPC in Government to ensure the
flow station. losses to the collaboration implementation of fiscal provisions
Federation. with Security in the PIA for the welfare of Host
Agents, in Communities and thus
The losses of crude flows into ensuring the
Bonny terminal amounted to strengthening responsibility for
safety of our communal ownership of crude oil
31% of production flow pipelines, both
through Bonny terminal, the pipelines.
Crude and White
losses of crude flow into products
Forcados and Brass terminals pipelines. In
were respectively 9% and 7% of addition,
production volume pumped Operation White
through the Forcados and Brass was carried out
terminals. recently by NNPC
to minimize
losses for product
theft and
sabotage.
6. Quasi-Fiscal Expenditure These amounts National Assembly, There is the need to ensure
In 2021, the total sum were deducted Federal Ministry of adequate oversight over the
expended as quasi-fiscal from Budget and expenditures that are not captured
expenditure and deducted at Federation National Planning in the National budget.
FAAC, amounted to revenue before and NNPC.
US$6.931billion (equivalent remittance
N2.651trillion). These are without
expenditures incurred by the appropriation
SOE and its subsidiaries (the by National
NNPC Group) on behalf of the Assembly.
Federation but outside the
national budget.
7. Outstanding Liabilities payable The non- Companies, FIRS response: NNPC and NPDC should be
to FIRS and NUPRC payment of NNPC/NPDC, FIRS It is important to thoroughly investigated while other
The total outstanding taxes these funds as and NUPRC note that debt is companies should promptly pay
payable to FIRS as at 31st July, at when due is dynamic and will their outstanding liabilities and the
2023 was $13.591million a constraint on constantly respective government agencies are
while the total amount of revenue flow to change with to intensify efforts to recover the
outstanding Federation the Federation. time. FIRS has debt.
revenue payable to NUPRC as many debt
at 31st December, 2022 was collection
$8.251billion. NNPC and mechanism
NPDC outstanding liabilities including
accounted for over 70% of enforcement.
these liabilities. The non- Therefore, the
payment of these funds as at Service is in the
when due is a constraint on process of
revenue flow to the Federation. recovering all the
See Appendix 17 for more outstanding
details. liabilities.
NNPC Response:
A committee has
been set-up by
FG with the
regulators and
SOE to carry out
a detailed
reconciliation on
this
8. NDDC levies Improved NDDC/EFCC/CBN NDDC should step up in its
The audit observed a revenue statutory role of prompt collection
collaboration between the collections to of NDDC levy while EFCC should
EFCC and NDDC in the the Federation render accounts of all NDDC levy
recoveries.
recovery of outstanding NDDC
levies. However, there will be a
need for further
reconciliations of payments
made by companies to EFCC to
determine amounts recovered
and amount outstanding (if
any) in the EFCC account
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because the NDDC could not
provide independent records
of such payments.
9. Pre-export financing and The repayment NNPC and Federal NNPC should transparently disclose
Project Eagle of the loan Ministry of Finance details of the subsidy and the
This is a subsisting agreement constitutes a beneficiaries of the payments, in
prior to 2021, which was heavy burden addition to rendering accounts on
initially a loan of $3billion on the the loan transaction. The pre-export
contracted in 2012 under an Federation and financing arrangement and all
agreement termed Pre-Export a constraint on other loan arrangements in
Financing (PXF) and was meant revenue flow to exchange for crude oil and gas
to settle subsidy payments due the Federation. should be extensively reviewed and
to petroleum product investigated.
marketers in full exchange for Furthermore, the Government should
proceeds of crude oil sales from The agreement
on cash call commission a comprehensive audit of the
one of the NNPC’s asset PMS subsidy-related financial
financing by transactions between NNPC and the
(NPDC’s OML 119). The NLNG
circumstances for the loans Federation, to determine all liabilities.
involving This should include all relevant parties,
taken in the past to settle Federation JVs including FAAC and post-mortem
Marketers under the Petroleum and NPDC committee, to ensure accurate and
subsidy scheme, which are requires verified data.
being recovered from the further
monthly Federation revenue clarifications
proceeds under Pre-export on the
financing and Project Eagle circumstances
agreement remains unclear. and amount
contracted on
behalf of the
NLNG Project Financing Federation.
This is covered under an
agreement entered in 2019 by
NNPC with NLNG on behalf of
NPDC, to provide incremental
gas supply to NLNG and in
return, NLNG would provide
an advance cash call payment
(CAPEX portion) of some
selected projects as identified in
the agreement. The agreed
financing amount is
US$2.469billion with duration
of 12 years as contained in the
external financing agreement
See Section 7.1 of this report
for further details.
10. NLNG Payments Potential loss of NNPC, Federal NLNG dividend NNPC has made clarification on the
The sum of $722.60million revenue to the Ministry of Finance, is no longer management of NLNG dividend, the
was paid to NNPC by NLNG as Federation OAGF and FAAC under NNPC onus is on the Ministry of Finance
dividend and interest earned purview. The and OAGF to clarify whether the
by Federation in 2021. This account is under fund is for the Federation or Federal
amount was neither remitted CBN custody Government. However, NAPIMS
to the Federation nor properly managed by Min confirmed that the fund came from
accounted for. of Finance/ the Federation’s share of NLNG
OAGF. dividend (See note 18.3 of 2021
NAPIMS AFS)
NLNG income is
used solely as
directed by the
Presidency (For
the development
of Gas
infrastructure in
Nigeria) and this
documented
evidence was
made available
for sighting
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during the Audit
exercise. The
statement of
status and
utilization of
funds from the
account was also
made available.
Furthermore, the
OAGF has also
provided
evidence to the
Presidential
Revenue
Monitoring and
Reconciliation
Committee
(PRM&RC)
managed by the
Budget Office
that shows the
funds initially
utilized for the
NLNG
investment came
from the Federal
Government and
not the
Federation
11. Transportation revenue Opaqueness in NNPC and The amount is We note NNPCL’s comment and
The sum of $194.85million accounting for Companies still being recommend that any reconciliation
and N9.73billion were the transportation reconciled. of discrepancies should be
pipeline transportation revenue. concluded in a timely manner to
revenue earned from JV ensure the Federation receives
operations. While the dollar revenues due to it as at when due.
receipt was remitted to the
Federation Account, the Naira NNPCL to ensure payment of the
receipt was neither remitted to amount due to the Federation
the Federation nor was it Account
properly accounted for.
Furthermore, there was no NNPCL and companies to provide
adequate disclosure of tariff the basis of computation of
rate and volumes with respect transportation fee
to what was paid to NNPC by
the JV operators.
12. Miscellaneous revenue Potential loss of NNPC We have We note NNPCL’s comment and
The sum of $702.19million revenue to the initiated the encourage NNPCL to conclude
and N343.56million were the Federation process of remittance to Federation as at when
miscellaneous revenue earned remitting the due.
from JV operations. While the amount to
dollar receipt was remitted to Federation
the Federation Account, the
Naira receipt was neither
remitted to the Federation nor
was it properly accounted for.
13. Revenue from trial marketing Loss in time NNPC The sum stated NNPC should ensure that revenues
period value of money including due to the Federation are remitted
The sum of $278.813million as a result of interest accrued as soon as received.
was earned by the Federation delay in was swept to the
from trial marketing period remittance Federation Record available shows that trial
crude lifting in 2021, Account at the marketing period ended when each
however, this amount was not conclusion of party commenced separate lifting in
swept to the Federation in TMP which September 2021 and not September
2021, though the JV Partner’s traditionally is 2022 when the payment was made.
(First E&P) share was the practice in
transferred to the Partner as the event of over
soon as the revenues were or under lift at
received into the TMP escrow the close out
account jointly operated by reconciliation.
both parties. The proceeds
were reported in
the September
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2022 FAAC
report
14. Revenue from OML 116 Loss in time NNPC The finding NNPCL should be investigated to
The sum of $69.30million was value of money which ensure recovery of this amount into
realized from the sale of crude as a result of established that the Federation Account.
oil lifted from OML 116, delay in NEPL unremitted
currently operated by NPDC remittance balance to
on behalf of the Federation, federation is to
hitherto operated by AENR the tune of
under service contract $7.61M is
arrangement. However, NPDC correct and
claimed cost recovery of NAPIMS is
$61.68million, leaving a following up
balance of $7.61million with NPDC to
(N3.14billion as per 2021 ensure payment
NAPIMS AFS) unremitted to of the profit oil
the Federation as at 31st to the Federation
December 2021. Account
15. Cash call The high federal ministry of NAPIMS There is need to carry out value for
NAPIMS continues to pay cash NAPIMS finance, ministry of continued money audit and independent
call to Newcross, despite the overhead cost budget and payment of cash reconciliation of outstanding
fact that Federation interest reduces national planning call to Newcross amounts due to the Federation as
profitability of and NNPC during the part of a comprehensive
has been transferred to NPDC.
Federation transition of the reconciliation of debts outstanding
Cash call payments to the tune
equity transfer. This is between NNPC Group and the
of N11.470billion and investment in to avoid Federation, especially with the
US$29.218million were made JVs. disruption of the advent of PIA.
by NAPIMS in 2021 with JV Operations
respect to asset already Full implementation of the PIA is
due to lack of expected to address the issue.
transferred to NPDC since funds. NAPIMS
2019. has a reconciled
Cash Call Receivables from position of the The explanation provided by NNPC
NPDC with respect to NPDC total cash call though cogent does not extinguish
NAOC and NPDC Newcross for paid to Newcross the process gap identified by the
which NAPIMS paid cash call on behalf of report. Continued cash call
on behalf of the Federation, NPDC. payments to assets transferred to an
despite the fact that NAPIMS NNPC subsidiary for whatever
has transferred Federation reason is a procedural weakness that
interest in the assets to NPDC needs to be addressed.
are N287.55billion and
N42.14billion respectively.
In addition to cash call,

NAPIMS also incurred
overheads cost to the tune of
US$221.283million. This is
considered high considering
the position of the National
Petroleum Policy gazette in
December 2017.
16. Update on Refineries Activities Inefficiency in Ministry of Rehabilitation of Special investigation should be
The audit observed that none resource petroleum, ministry the old Port instituted to establish the status of
of the refineries was allocation, of finance and Harcourt the refineries and carry out value
operational in 2021 despite which has NNPC Refinery (Area 5) for money assessment on the
spending about N200billion hindered at 60% refineries
within 2020 and 2021 on progress and
limit the Completion
refinery rehabilitation. This
amount was deducted from the potential for EPC: Technimont
Federation sales proceeds. growth and Project:
NNPC to provide clarifications development in Rehabilitation
on the status of the refineries. the
downstream Quick fix project
sector of is on-going in
Nigeria oil and
WRPC.
gas industry.
EPC: Daewoo
E&C Nigeria
Limited (DECN)
Project: Quick
fix
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Quick fix project
is on-going in
KRPC.
EPC: DECN
Project: Quick
fix
The quick-fix
initiative on
WRPC and KRPC
is expected to
restore both
refinery plants to
a minimum of
60 per cent of its
nameplate
capacity by Q4
2024.
Also note that
these projects
(WRPC and
KRPC) are been
executed in three
work packages
as a
Maintenance
Services contract
by Daewoo E&C
Nigeria Limited,
with a duration
of Fifteen (15)
and Twenty-One
(21) months
respectively.
17. Deductions from the These NNPC, RMFAF and The submission Previous NEITI audit reports have
Federation crude sales deductions FAAC is in line with consistently highlighted
proceeds remain a heavy our 2021 record. transparency issues in the
The sum of N1.20trillion cost to Kindly note that deductions from federation crude
($3.01billion) was deducted Federation the deductions sales. Full implementation of PIA
from domestic sales proceeds. Revenue were as agreed provisions will address the issues.
Subsidy accounted for remittance. at the FAAC and However, subsidy has been
N1.16trillion, Crude & product there were terminated by the Federal
losses accounted for nothing hidden Government in 2023.
N16.20billion, Pipeline repairs in the The practice of charging crude oil
accounted for N22.05billion transactions and product losses, Pipeline repairs
and Strategic stock holding and Strategic stock holding cost to
accounted for N6.75billion. Federation should no longer be
acceptable under the PIA. The
Federation should not be made to
pay for pipeline maintenance,
strategic holding cost and losses
that the new commercially oriented
NNPC has incurred on its own.
The fact that the deductions were
agreed at FAAC does not make such
huge deduction without
appropriation a non-issue.
18. Conversion of FIRS tax oil and Loss of revenue NNPC NNPC response: Full implementation of PIA
NUPRC royalty oil to DSDP in the sum of Due to National provisions will address these issues
About 90% and 46% of PSC $3.34million to Energy Security
FIRS-Tax oil and PSC NUPRC- the Federation Demand, Federal
Royalty oil Cargoes were as a result of Govt directed
respectively borrowed and remittance of that in addition
converted to DSDP. The sales the sales to traditional
proceeds in dollars were proceeds of PSC 445k barrels
originally meant to be remitted royalty in Naira allocated for
to the respective FIRS and without domestic
NUPRC designated accounts applying
consumption
within 30 days otherwise appropriate
NNPC could
penalties will apply. However, exchange rate
advised by CBN utilize Royalty
NNPC applies a 90-day and Tax oil
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payment period (without and loss in time volumes to
payment of late penalty) and value of money Augment.
remits the sales proceeds in as a result of Subsequently,
Naira as in the case of delay in the 90-day
domestic crude to the remittance. payment term in
respective agencies designated Naira for
accounts. This practice Federation
resulted in revenue loss in the domestic cargoes
sum of $3.34million to the was also applied
Federation as a result of on the statutory
remittance of the sales obligation
proceeds of PSC royalty in volumes.
Naira without applying Furthermore,
appropriate exchange rate NNPC applied
advised by CBN. exchange rate as
advised which
relates to the
month of lifting,
however a
reconciliation
team as directed
by the President
is working to
resolve all
outstanding
issues between
FAAC and NNPC.
19. Outstanding liabilities on PSC Loss in time NNPC, FIRS and work in progress NNPC should ensure that revenues
Taxes and Royalty Oil value of money NUPRC and due to the relevant agencies are
The outstanding liabilities on as a result of reconciliation remitted as at when due
crude royalty/concession delay in team constituted.
rental and taxes are in the sum remittance
of $26.36million and
$5.63million respectively. Of
these outstanding liabilities,
the sum of $83,315 and
$1.64million relate to prior
year outstanding liabilities on
concession rental and
education tax respectively yet
to be remitted to the respective
agencies’ accounts as at 2021.
Similarly, the outstanding
liabilities on gas royalty and
taxes are in the sum of
$547,955 and $3.74million.
Of these outstanding liabilities,
the sum of $69,633 and
$882,958 relate to the prior
year outstanding liabilities on
gas royalty and taxes
respectively yet to be remitted
to the respective agencies’
accounts as at 2021.
20. Revenue from EGTL Potential loss of NNPC The sum of NNPC should account for this
transactions revenue to the $20.22million revenue and the transactions should
Included in export gas sales of Federation represents 8% of be investigated
$414,23million is the sum of gross revenue
$242.05million revenue which is payable
earned from Escravos gas to as price balance
liquid (EGTL). Of this amount, per contract
only the sum of $20.22million agreement
was received into the CNL noting that
proceed account and remitted revenues are
in 2021, the balance of from an SPV
$221.82million was neither project in
received nor properly partnership with
accounted for. Chevron.
21. Non-cash call payment The Federation NNPC, RMFAC and TMC approval NNPC Ltd should stop the practice
The sum of US$74.294million is funding NUPRC directing of funding assets transferred to
was paid as severance from assets that do NAPIMS to pay NPDC from Federation cash call
cash call account for Panocean not give the severance account. It is expected that
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JV in 2021 that had been taken corresponding settlement to Pan whenever assets in a JV is taken
over by NPDC in 2020. returns. Ocean over, it should also include
Management liabilities.
staff amongst
other NNPC should provide the basis for
obligations. TMC decision to place the entire
At the time of liability (legacy & community
revocation and contractors' payments and
asset transfer to severance obligations to staff) on
NPDC, Pan the federation alone.
Ocean had some
As this issue relates to a license that
outstanding
was revoked due to the operator’s
liabilities, such inability to meet its obligations to
as legacy and government, we recommend that,
community when such decisions are taken,
contractors’ details (including liabilities,
payments and payables, etc.) of the terms of the
severance revoked license should be shared
obligations to with the RMAFC /NEITI/ and
staff. disclosed on NUPRC website as
Thus, TMC license revocation has potential
resolved that impact on the revenue accruing to
NAPIMS should the federation.
pay the staff
severance Finally, the upstream regulator
(Including must ensure that all operational and
Management ancillary liabilities are adequately
staff) to avoid established and assigned to
any unnecessary responsible partners during the
encumbrance process of revocation.
from the
community or
former staff to
the operations of
the asset.
22. NNPC records Vs NAPIMS AFS
The sum of N107.47billion
was validated as domestic gas Discrepancies NNPC should improve data
revenue based on COMD in records raise The COMD management processes and establish
record, however, NAPIMS concerns about record being controls to prevent future
reported the sum of the integrity referenced is the discrepancies. Regular monitoring,
N84.47billion as domestic gas and accuracy of actual cash data reconciliation, and cross-
revenue in 2021 NAPIMS AFS the data. received into the verification can help minimize the
Gas revenue occurrence of such discrepancies
The sum of $1.57billion account based on and maintain data integrity.
(N624.67billion) was FAAC report.
validated as export gas However,
revenue based on COMD Discrepancies NAPIMS AFS is
record, however, NAPIMS in records raise based on the
reported the sum of concerns about accrual concept
N563.98billion as export gas the integrity of accounting in
revenue in 2021 NAPIMS AFS and accuracy of line with IFRS.
the data.
The sum of $1.64billion
(N655.16billion) was
validated as export crude oil
sales revenue based on COMD
record, however, NAPIMS
reported the sum of Discrepancies
N540.75billion as export in records raise
crude revenue in 2021 concerns about
NAPIMS AFS the integrity
and accuracy
of the data
23. 13% derivation Violation of RMFAC and OAGF The practice of computing 13%
The practice of computing 13% Section 162(2) derivation on the balance of revenue
derivation on the balance of of the after deductions from the total
revenue after deductions from Constitution of collections should be discontinued.
the total collections is contrary the Federal Rather, the 13% derivation should be
Republic of based on total collections for the
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to the intention of the Nigeria which relevant period in accordance with
derivation objective. provides that Section 162(2) of the constitution of
the 13% the Federal Republic of Nigeria.
derivation
should be based
on the revenue
accruable to the
Federation from
oil and gas
sector.
24. Environment There should be clear delineation of
roles to avoid potential conflicts
between the regulatory agencies.
Regulations - There is an Gas flaring (Gas facilities set-up or
overlapping of regulatory gas flaring for testing or operational
powers between the reasons) – There should be a
enforcement agencies on specified limit in the contract that is
environmental issues that is allowable for facility set-up for gas
NUPRC, NMDPRA, Oil and Gas flaring. This would reduce the harm
Division of the Federal to the environment.
Ministry of Environment
(FMOE). This could offer
companies that pollute the Environmental Remediation Fund –
environment to take advantage The administration of the fund
and choose the regulator to should be vested in NUPRC.
obey. The agency's process
and or rules should be
streamlined and not The procedure for assessing
overlapping. compensation for environmental
damage should be clearly
documented and put in a public
repository.
25. NEITI Audit remediation The objective of NEITI/NNPC/all There is the need to strengthen
The major issues raised in NEITI Audit is Regulatory agencies remediation mechanisms and
previous NEITI audits have undermined in the oil and gas involve independent third parties to
largely remained the same and sector conduct detailed investigations
unresolved, whereas the when necessary.
remediation mechanism has
become weaker over time.
26. Issues related to PIA. It empowers NNPC/NASS/NUPR NUPRC: There is the need to review PIA to:
I. The provision in NNPCL to C The Commission
Section 64 (m) of deduct cost is currently
the PIA that makes from revenue Clarify Terminology and
collating items Deductions: To address the
NNPC the supplier prior to on the PIA 2021
of last resort and revenue ambiguity surrounding the
that require allocation of 30% for both the
that all associated remittance. amendment
costs to be borne by management fee and the FEF, the
the Federation is PIA should provide clear and
capable of being precise definitions of terms like
misinterpreted as it "profit oil" and the "management
was in the old fee." This will eliminate confusion
practice of The amount and ensure consistent application
deducting from due to the across relevant Sections of the law.
revenue source. frontier
II. Section 64 (C) and 9 exploration Review and Streamline Deductions:
(4) of the PIA fund from PSC The federal government should
provides for 30% operations is consider reviewing the deductions
deduction from not clear. from profit oil to ensure they are
profit oil and profit clearly delineated. If the intention is
gas by NNPCL for Potential source to have one 30% retention that
frontier exploration of conflict covers both the management fee
fund and NNPCL between NNPCL and the FEF, the wording should be
management fee but and the rephrased to reflect this clearly.
does not provide commission Alternatively, if separate 30%
clarification as to retentions are required, the
what percentage The equity language should be revised
goes for frontier crude proceeds, accordingly.
exploration fund which
and NNPCL constitute The Minister of Petroleum and
management fee. major source of Minister of Finance should
revenue to the determine the assets, interests and
Nigeria
Extractive
Industries

Initiative
FULL
Report

III. The provision of Federation liabilities to be transferred to NNPCL
Section 54(1) of the prior to PIA, and what remains with NNPC in
PIA, 2021 provides will no longer accordance with Section 54 (1) of
that the Minister of flow to the the PIA.
Petroleum and the Federation.
Minister of Finance
shall within 18
months of the
effective date of the
PIA identify and
transfer assets,
interests and
liabilities of NNPC to
NNPCL. However,
this provision of the
PIA has not been
affected, but NNPCL
has taken over all
the Federation assets
in the JVs and
operate as a
business entity.
27. Award of Marginal field Award of NUPRC The NUPRC should adhere strictly to
According to the Commission’s marginal fields all its regulations.
regulation, all successful prior to
applicants whose names are in payment of
the Notice of Preferred Bidder signature
Status ought to have made bonus as well
payment of signature bonus, as payment of
prior to award, however, the signature
list of awardees contained bonus by
names of companies that had companies that
not made payment of signature did not
bonus. participate in
the process by
NUPRC
indicates that
the
Commission
did not adhere
to its own
regulations.
Recommendati
ons
28. Discrepancy in PMS The implication NNPCL, NMDPRA The discrepancy in the volume of
importation between NNPC of the PMS imported and subsidy value
and NMDPRA discrepancy should be investigated.
The volume of PMS imported between NNPC
in 2021 under the DSDP and NMDPRA
arrangement based on NNPC’s records
records was significantly indicates that
different from the volume of there is no
PMS imported as per NMDPRA independent
records. third-party
confirmation of
product
importation
volume and
subsidy value.
29. Potential loss of revenue to the We recommend that the
Federation upon the Government should through the
Implementation of PIA Ministry of Budget and National
Gas flare penalty Planning/Budget Office of the
Pofit oil Federation and others:
Revenue from JV Assets
Royalty and tax oil
management fee by NNPC Enhance Revenue Forecasting
activities:
Nigeria
Extractive
Industries

Initiative
FULL
Report

Gas flare penalty which Establish a comprehensive revenue
hitherto was paid to the forecasting mechanism that
federation will now be utilised considers the potential impacts of
for a fund managed by the policy changes, such as the
NMDPRA for environmental reduction in the state's share of profit
remediation. oil from Production Sharing
Contracts (PSCs).
Pofit oil which hitherto was
paid to the federation in full
will now only receive about Review Policy Trade-offs:
40% of the total collection. The Government should evaluate
the trade-offs between short-term
Revenue from JV Assets which revenue optimization and long-
hitherto was paid to the term sustainable development
Federation Account appears objectives of the Nation before a
now to accrue to NNPCL. policy/law or regulation is
deployed as balancing the
Royalty and tax oil immediate financial needs of the
management fee by NNPC. Federation with the potential
impacts on future revenue streams
is crucial for informed decision-
making.
Regular Review and Adjustment:

The Government should establish a
periodic review process for
extractive sector policies to assess
their impact on government
revenue and other socio-economic
factors. This iterative approach
allows for timely adjustments based
on evolving circumstances.
We also recommend that the

Government prioritizes the
development of an Optimization of
Environmental Fund Allocation
strategy, incorporating a robust
oversight mechanism and a
Transparent Fund Management
mechanism of all funds intended for
environmental remediation through
the NMDPRA in collaboration with
relevant stakeholders. These steps
will enhance transparency, foster
community trust, encourage
efficient fund utilization, and ensure
environmental objectives are met.
We recommend a revisiting of the

functions of the Niger Delta
Development Commission (NDDC)
and aligning them with the host
community development funds
created by the PIA. Ensuring that
each institution has clearly defined
roles and responsibilities which will
reduce operational costs and
increase effectiveness.
Finally, we recommend that the

focus of the next EITI Report should
be on the impact of the PIA on
domestic resource mobilisation.
Nigeria
Extractive
Industries

Initiative
Nigeria
Extractive
Industries

Initiative
NIGERIA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE
NEITI HOUSE 121, Danladi Kifasi Close, Wuye District, Abuja.
+234 9 2905984 |+234 9 2906624 | [email protected]
www.neiti.gov.ng

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THE PRESIDENCY

OIL AND GAS

OIL AND GAS

NEITI 2021 OIL AND GAS INDUSTRY REPORT Transparency

For more information, contact:

NEITI 2021 OIL AND GAS INDUSTRY REPORT i Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT ii Transparency

Abbreviations and Acronyms x

2 CHAPTER 2 - THE OIL AND GAS SECTOR IN NIGERIA 21

NEITI 2021 OIL AND GAS INDUSTRY REPORT iii Transparency

3 CHAPTER 3 - EXPLORATION, PRODUCTION AND EXPORT 46

4 CHAPTER 4 – REVENUE COLLECTION AND RECONCILIATIONS 76

5 CHAPTER 5 – CASH CALLS 96

6 CHAPTER 6 – DOWNSTREAM OPERATIONS 108

NEITI 2021 OIL AND GAS INDUSTRY REPORT iv Transparency

CHAPTER 7 – INFRASTRUCTURE PROVISIONS, BARTER ARRANGEMENT,

8 CHAPTER 8 – OUTCOMES AND IMPACT 137

NEITI 2021 OIL AND GAS INDUSTRY REPORT v Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT vi Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT vii Transparency

Table 42 Summary of Reconciled and Unilaterally Disclosed Revenue Flows by Streams

Appendix 1 Scoping Study Report

NEITI 2021 OIL AND GAS INDUSTRY REPORT ix Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT x Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT xi Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT xii Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT xiii Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT xiv Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT Transparency

Planning without facts has resulted in retrogression and counterproductive consequences

NEITI 2021 OIL AND GAS INDUSTRY REPORT 2 Transparency

Orji Ogbonnaya Orji, PhD

NEITI 2021 OIL AND GAS INDUSTRY REPORT 3 Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT Transparency

The key objectives of the audit include the following:

3. Scope and Materiality

NEITI 2021 OIL AND GAS INDUSTRY REPORT 5 Transparency

4. Key Highlights of the 2021 Oil and Gas Audit Report

Total number of companies - 69

NEITI 2021 OIL AND GAS INDUSTRY REPORT 6 Transparency

4. Key Highlights of the 2021 Oil and Gas Audit Report

NEITI 2021 OIL AND GAS INDUSTRY REPORT 7 Transparency

NEITI 2021 OIL AND GAS INDUSTRY REPORT Transparency

1.1. Background - NEITI

1.1.1. The NEITI 2021 Oil & Gas Report

1.3. Basis and Period of Reporting

NEITI 2021 OIL AND GAS INDUSTRY REPORT 9 Transparency

• ISA 530 –Audit Sampling

Table 2 - Average Exchange Rate by CBN

Table 3 - NNPC/FAAC Monthly Exchange Rates for 2021

NEITI 2021 OIL AND GAS INDUSTRY REPORT 10 Transparency

1.4. Scope of Work

Figure 1 – The Audit Phases and Deliverables

Scoping Inception Initial Independent Independent

1.4.1. Materiality for the Report

NEITI 2021 OIL AND GAS INDUSTRY REPORT 11 Transparency

Table 4 - A Description of Revenue Streams

6 Petroleum Profits Tax PPT is tax imposed on income of companies in petroleum

NEITI 2021 OIL AND GAS INDUSTRY REPORT 12 Transparency

Table 4 - A Description of Revenue Streams (cont’d)