NNPC Audit Ignored N296bn Condensate Market – Experts

Mar 18, 2015

As reactions continue to trail the release of the full audit report of the Nigerian National Petroleum Corporation, industry experts have said a thorough audit of the process and operations of the NNPC needs to be carried out as the “NNPC audit ignored N296bn condensate market” i.e it failed to show that revenue from condensates was accounted for, ’FEMI ASU writes The final report on the forensic audit into allegations of unremitted funds into the Federation Account by the NNPC made no clear mention of the amount the nation generated from condensates between January 2012 and July 2013, the review period. Nigeria, Africa’s top oil producer, produces roughly about 250,000 to 300,000 barrels per day of condensates, which occur in substantial quantities in oil and gas fields. The condensate market, which is valued at over $1.5bn (N296bn based on a rate of N197 to a dollar) is from Akpo,

Nigeria, Africa’s top oil producer, produces roughly about 250,000 to 300,000 barrels per day of condensates, which occur in substantial quantities in oil and gas fields. The condensate market, which is valued at over $1.5bn (N296bn based on a rate of N197 to a dollar) is from Akpo, Oso and several other small fields. Sometimes it is blended into other heavy crude grades to reduce the gravity and improve the market value.

It typically sells for about the same price as normal crude oil or often times higher, and sometimes it is exported directly. A top industry player, who pleaded not to be named as his company has a relationship with the NNPC, said the audit report by PricewaterhouseCoopers clearly showed that the country needed a proper and transparent oil revenue management authority. “The failings of the report in itself were a candid reflection of the failings of the organization (NNPC) itself. There are several figures that don’t add up; even the auditors mentioned this. “Furthermore, the auditors completely overlooked the over $1.5bn condensate market – no mention of the revenues or expenditure of revenue from this space.

I suspect this was largely due to the narrow scope of work given to them and the paucity of materials/information sources.” The President, Nigerian Association for Energy Economics and Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, said the revelations from the PwC report confirmed the concerns expressed by most Nigerians about the opaque nature of the NNPC operations and the fact that the regulatory framework in the oil sector lagged behind global best practices. “The dependence on secondary information sources to generate the initial report by the PwC suggests that effective and thorough audit of the process and operations of the NNPC was not carried out to enable the firm to turn out an unqualified report,” he stated.

It typically sells for about the same price as normal crude oil or often times higher, and sometimes it is exported directly. A top industry player, who pleaded not to be named as his company has a relationship with the NNPC, said the audit report by PricewaterhouseCoopers clearly showed that the country needed a proper and transparent oil revenue management authority. “The failings of the report in itself were a candid reflection of the failings of the organization (NNPC) itself.

There are several figures that don’t add up; even the auditors mentioned this. “Furthermore, the auditors completely overlooked the over $1.5bn condensate market – no mention of the revenues or expenditure of revenue from this space. I suspect this was largely due to the narrow scope of work given to them and the paucity of materials/information sources.” The President, Nigerian Association for Energy Economics and Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, said the revelations from the PwC report confirmed the concerns expressed by most Nigerians about the opaque nature of the NNPC operations and the fact that the regulatory framework in the oil sector lagged behind global best practices. “The dependence on secondary information sources to generate the initial report by the PwC suggests that effective and thorough audit of the process and operations of the NNPC was not carried out to enable the firm to turn out an unqualified report,” he stated.

“The failings of the report in itself were a candid reflection of the failings of the organization (NNPC) itself. There are several figures that don’t add up; even the auditors mentioned this. “Furthermore, the auditors completely overlooked the over $1.5bn condensate market – no mention of the revenues or expenditure of revenue from this space. I suspect this was largely due to the narrow scope of work given to them and the paucity of materials/information sources.” The President, Nigerian Association for Energy Economics and Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, said the revelations from the PwC report confirmed the concerns expressed by most Nigerians about the opaque nature of the NNPC operations and the fact that the regulatory framework in the oil sector lagged behind global best practices. “The dependence on secondary information sources to generate the initial report by the PwC suggests that effective and thorough audit of the process and operations of the NNPC was not carried out to enable the firm to turn out an unqualified report,” he stated.

I suspect this was largely due to the narrow scope of work given to them and the paucity of materials/information sources.” The President, Nigerian Association for Energy Economics and Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, said the revelations from the PwC report confirmed the concerns expressed by most Nigerians about the opaque nature of the NNPC operations and the fact that the regulatory framework in the oil sector lagged behind global best practices. “The dependence on secondary information sources to generate the initial report by the PwC suggests that effective and thorough audit of the process and operations of the NNPC was not carried out to enable the firm to turn out an unqualified report,” he stated.

There are several figures that don’t add up; even the auditors mentioned this. “Furthermore, the auditors completely overlooked the over $1.5bn condensate market – no mention of the revenues or expenditure of revenue from this space. I suspect this was largely due to the narrow scope of work given to them and the paucity of materials/information sources.” The President, Nigerian Association for Energy Economics and Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, said the revelations from the PwC report confirmed the concerns expressed by most Nigerians about the opaque nature of the NNPC operations and the fact that the regulatory framework in the oil sector lagged behind global best practices. “The dependence on secondary information sources to generate the initial report by the PwC suggests that effective and thorough audit of the process and operations of the NNPC was not carried out to enable the firm to turn out an unqualified report,” he stated.

“The dependence on secondary information sources to generate the initial report by the PwC suggests that effective and thorough audit of the process and operations of the NNPC was not carried out to enable the firm to turn out an unqualified report,” he stated. The condensate market, which is valued at over $1.5bn (N296bn based on a rate of N197 to a dollar) is from Akpo, Oso and several other small fields. Sometimes it is blended into other heavy crude grades to reduce the gravity and improve the market value.

It typically sells for about the same price as normal crude oil or often times higher, and sometimes it is exported directly. A top industry player, who pleaded not to be named as his company has a relationship with the NNPC, said the audit report by PricewaterhouseCoopers clearly showed that the country needed a proper and transparent oil revenue management authority. “The failings of the report in itself were a candid reflection of the failings of the organization (NNPC) itself. There are several figures that don’t add up; even the auditors mentioned this. “Furthermore, the auditors completely overlooked the over $1.5bn condensate market – no mention of the revenues or expenditure of revenue from this space.

I suspect this was largely due to the narrow scope of work given to them and the paucity of materials/information sources.” The President, Nigerian Association for Energy Economics and Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, said the revelations from the PwC report confirmed the concerns expressed by most Nigerians about the opaque nature of the NNPC operations and the fact that the regulatory framework in the oil sector lagged behind global best practices. “The dependence on secondary information sources to generate the initial report by the PwC suggests that effective and thorough audit of the process and operations of the NNPC was not carried out to enable the firm to turn out an unqualified report,” he stated.

The Punch, May 4 Page 29.

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