Rreport by the office of the Auditor-General for the Federation says some operators of oil and gas terminals do not measure the products exported during Fiscalisaton and Defiscalisation.
Fiscalisation is the measuring of a crude oil shore tank nominated for a given export operation prior to the commencement of discharge of its content.
It is done to obtain all the data required for the determination of quantity and taking of proper samples of quality control of the crude oil in the tank.
Defiscalisation is the measuring of a crude oil tank after loading from the tank in order to obtain relevant data and samples to determine the quantity and quality of the loaded product.
The report revealed that the oil and gas terminal operators have not been using measuring equipment since 2012, thereby causing the nation a loss of unquantified volumes of crude and gas.
The report centered on the performance of pre-shipment inspection and monitoring of crude oil and gas exports by the Federal Ministry of Finance, Budget, and National Planning between January 2016 to December 2020.
Dated June 29, 2022, the report marked 747/99/CONF/VOL.II/75 was signed by Adolphus Aghughu for the Auditor-General for the Federation. A copy of the report was submitted to the office of the National Assembly Clerk.
A part of the report reads: ”Section 52(1) of Petroleum (Drilling & Production) Regulations of 1969 stipulate that ‘the licensee or lessee shall, with volume and gravity correction to sixty-degree Fahrenheit and by a method or methods approved by the Director of Petroleum Resources in writing, measure or weigh — (a) all crude oil won and saved and casing head petroleum spirit recovered from the relevant area; and (b) all-natural gas sold.
“Measuring equipment meant to guarantee the accuracy of quantity and sample collection for quality testing is either not available or used at terminals because DPR as a regulatory authority has not provided and enforced its usage was available.
“The manual method of arriving at quantity and sample collection is prone to error and can lead to inaccurate records.
“Also, section 52(2) of the Regulation stipulates that ‘the Director of Petroleum Resources or an officer authorised by him shall have the right to be present whenever any such measurement or weighing takes place
“Interviews conducted with the managing directors and staff of PIAs and MEA revealed that Okono terminal does not have metering equipment since 2012. It also revealed that Ebok and Forcados terminals do not use the available metering equipment to measure quantity during Fiscalisaton and Defiscalisation exercise.
“Absence of measuring equipment at these terminals has resulted in delayed lifting/sailing by the vessel, high rate of error resulting from manual metering, and increased fatigue for monitors through tedious manual process of determining export quantity.
“Also, no independent verification of loading into the vessel by DPR who rather adopt and relied on the figures arrived at by the Agents”.
“The quantity of crude oil and gas presented to the audit team was without data from exports of and Gas made by NLNG, Puffin, and Zaffiro Terminals from 2016 to 2020 since they were not accessible for inspection and monitoring. This will lead to continuous loss of Oil and Gas revenue to the government.
The report quoted the ministry as saying that “all terminal operators own the equipment needed at the terminal to measure quantity and quality of crude oil exports, however saying that Okono terminal is the terminal without metering equipment.
The ministry, according to the report, said “While as a check on the exporters, the Pre-shipment Inspection Agents (PIAs) and Monitoring & Evaluation Agents (MEAs) who are appointed by the Federal Government, do have different types of relevant equipment to confirm the quality and quantity of the crude oil exports in their independent laboratories.
“All terminal operators own the equipment needed at the terminal to measure the quantity and quality of crude oil exports. While as a check on the exporters, the Pre-shipment Inspection Agents (PIAs) and Monitoring & Evaluation Agents (MEAs) who are appointed by the Federal Government, do have different types of relevant equipment to confirm the quality and quantity of the crude oil exports in their independent laboratories.”
The report also said that the management of the Nigeria Liquified Natural Gas (NLNG) continually refused PIAs and MEAs access to the terminals under its control to carry out inspection and monitoring activities of export from those terminals as required by law.
It added: ” The audit team noted during the review of Inspection and Monitoring Agents’ annual reports for 2016 — 2020, that Nigeria Liquefied Natural Gas Limited (NLNG) has continually refused PIAs and MEAs access to the Terminals under its control to carry out inspection and monitoring activities as required by the Act.
“Also, the operators of Puffin (Floating Production Storage and Offtake (FPSO)) Terminal located on Ajeoil field and Zaffiro Terminal being operated by Mobil/NNPC, located outside Nigeria in Equatorial Guinea under the inspection of Trobell International Nig. Ltd and Robinson International Energy Limited could not be accessed for inspection”.
However, the report quoted the Federal Ministry of Finance, Budget, and National Planning to the audit query as saying that “NLNG is relying on some guarantees/assurance in the existing law that established NLNG which they posited made it difficult for the company to comply with the Pre-Shipment Inspection Act No. 10 of 1996.