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Data and the oil industry by Thisday


Thisday newspaper takes a critical look at the shameful opacity in NNPC in this editorial. Read…


It is shameful but rather typical that even when Nigeria was able to provide the Organisation of the Petroleum Exporting Country (OPEC) with some credible data, the country keeps none for its own reference. “I am ashamed we didn’t have data source on Nigeria. I think as we provide data for OPEC, we should address the question of churning credible data to be consumed in-country. It is a pity when students are looking for data we have to go to OPEC to get data about Nigeria,” said Dr. Folasade Yemi-Esan, Permanent Secretary, Ministry of Petroleum Resources.
Unfortunately, such concerns no longer seem an anomaly as the Nigerian oil and gas sector operates more or less in secrecy and obscurity. The dearth of data has remained a major challenge in accessing and in assessing the operations of the state-owned behemoth, the Nigerian National Petroleum Corporation (NNPC) that is notorious for its institutional opacity. Indeed, for the entire gamut of the industry – from exploration to crude oil production to oil lifting, exports and sales – the data value chain is unreliable and weakened, giving rise to lack of transparency and rabid corruption.

According to a recent policy briefing by the reinvigorated Nigeria Extractive Industries Transparency Initiative (NEITI), the NNPC owes the government a backlog of unremitted oil revenue running into billions of naira. Although the state-owned oil company has started making public a detailed overview of its finances, the reports are said to be deficient because they do not delineate “the operational and financial performance of NNPC subsidiaries, including sales-level data.”
It is also noteworthy that one of the most valuable oil block contracts, OPL 245 – an opaque contract better known as the Malabu Oil – was awarded by the NNPC. The contract, which is still a subject of headlines and litigations, has cost the nation several billions of dollars. All this merely confirmed what the London Economics wrote about the country’s oil industry some few years back: “Information about Africa’s biggest oil industry is an opaque myriad of numbers. No one knows which ones are accurate; no one knows how much oil Nigeria actually produces.If there were an authoritative figure, the truly horrifying scope of corruption would be exposed.”
That the lack of accurate data has made many to raise doubts on the accuracy of payments made by oil companies to the government with respect to tax and royalty is an understatement. Nigeria reportedly loses about N2.2 trillion annually to inaccurate measurement system adopted across all sectors of the economy, especially in the oil and gas sector. According to the CEO of Nigerco Nig. Ltd, Mr. Yagbagi Sani, Nigeria’s exact crude oil production is not correctly known based on the fact that calculation is usually done on estimates and comparison of temperature and pressure at the well heads. He added: “No one actually knows what comes out of the well and what happens between the well and tank farms.”

For decades, there have been efforts to address the institutional and regulatory framework weighing down the NNPC and indeed, the oil industry. The present administration vowed to redress the wrongs. It was also the need to bring integrity, transparency and accountability to bear on the operations of the problematic oil sector and indeed the entire economy that made the country to recently join the Open Government Partnership. But there cannot be openness in darkness and that is why availability of data is important not only to aid planning and research, but also for transparency and containing impunity.
When there are gaps in essential information – as there are today in the oil and gas sector– and the accuracy and validity of the data is widely questioned, it is easy to game such a system.

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