Still on Nigeria’s Plan on Crude Oil Tracking, By Rahma O.Oladosu



The Federal Government recently revealed its intention to commence crude oil tracking in the country. It is rather curious but true! It goes to show that since the discovery of crude oil in Nigeria in over 50 years ago, no appropriate system or mechanism has been on ground to track and account for the usage of crude oil,  either domestically or for export.

Crude oil is a natural unrefined petroleum resource composed of hydrocarbon deposits and other organic materials. A type of fossil fuel, Crude oil is typically obtained through drilling; it is then refined and processed into a variety of forms, such as gasoline, kerosene and asphalt, and sold to consumers, both within and outside the country.

Crude Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta after half a century of exploration. The discovery was made by Shell-BP, at the time the sole concessionaire. Nigeria joined the ranks of oil producers in 1958 when its first oil field came on stream producing 5,100 bpd.

Petroleum production and export play a dominant role in Nigeria’s economy and account for about 90% of her gross earnings. This dominant role has pushed agriculture, the traditional mainstay of the economy, from the early fifties and sixties, to the background.

Just recently, the Federal Government indicated her desire to start the process of tracking the nation’s crude oil from 2019, in order to be able to account for every drop of the commodity produced in the country. The Minister for Petroleum Resources, Mr. Ibe Kachikwu, in a podcast distributed to journalists in Abuja, said the Federal Government was already working with the Department of Petroleum Resources (DPR) to develop an information technology (IT) platform that would make the crude oil tracking possible and  will enable it track every molecule of oil produced by the country.

It must be stated here that in the context of the implementation of the Extractive Industry Transparency Initiative (EITI) in Nigeria, many reports have indicated that no data on revenues received from the oil and gas companies as royalty, taxes, or other charges released by either one agency (be it the CBN or the NNPC), can be regarded as accurate, authentic and final.

Many have argued that such figures needed to be subjected to audits conducted in accordance with international standards and then made available to the Nigeria Extractive Industries Transparency Initiative (NEITI) an independent auditor for reconciliation of figures from oil companies and for a thorough validation of the data and information. This is the whole idea about Nigeria signing on to the EITI ten years ago.

A report by the Natural Resource Governance Institute, titled “NNPC still holds blank check” said that the NNPC withheld over $4.2 billion (about N824.7 billion) out of a total of $6.3 billion (N1.24 trillion) revenues realized from crude oil sales in the second half of 2015.The report said only $2.1 billion (about N413.7 billion) was transferred to the Federation Account.

The report also said while part of the withheld funds was used for servicing Nigeria’s share of the joint venture operating obligations, the NNPC did not fully explain what the other retained revenues from domestic crude and The Nigerian Petroleum Development Company( NPDC) oil sales were used for. In general, the report said despite the on-going reforms in the oil sector, the NNPC under the present administration was still retaining a major share of oil sale earnings and spending at will.

Meanwhile, a jurisdiction, like Saudi Arabia, a major oil producing nation, has continued over the years to keep track of their oil production through Aramco Company Services. They make use of well functioning equipments to pump, measure and keep record of how much oil is produced yearly, used, sold out and what is left, giving an accurate record of oil revenue to be accounted for.

With the rate of corruption in the country coupled with the opaque nature of the oil industry, the decision would not have come at a better time than now. The Federal Government should as a matter of priority get cracking with the modalities to get this information technology (IT) platform on board to save the country of several years of crude oil bleeding.

But then again…Why not start now? Why wait till 2019 when we are at a huge risk of losing more oil revenue before the said 2019?

Rahma O.Oladosu, a graduate of Linguistics from University of Abuja, is an intern with PRNigeria Abuja.   Email: [email protected]