The money the federal government earned from the sale of crude oil dropped by 79 per cent in 2023, from $11.199bn it made in 2022 to $2.329bn, the Nigeria Extractive Industries Transparency Initiative's (NEITI) 2022 and 2023 Independent Oil and Gas Industry Report has shown.
The report stated that the significant drop in the government's revenue during the period was due to the impact of the subrogation of JV assets to the NNPC Limited, coupled with the decline in the annual average crude selling price.
The report stated that the federation's crude oil sale was affected with 28.091 million barrels sold in 2023, compared to the 109.313 million barrels sold in 2022, explaining that the 81.222 million barrels (74%) sharp decrease was due to the full impact of the PIA implementation.
While noting that crude oil sold by NNPC Limited is jointly owned by stakeholders, including the federation, NNPC Limited, FIRS and NUPRC, the report stated that the derived annual average selling price of crude oil by NNPC Ltd in 2022 was US$103.63 per barrel.
The monthly average selling price during the year was highest at US$ 119.71 per barrel in May and lowest at US$81.77 per barrel in December.
In 2023, the average price reduced to $83.61 per barrel, a decrease from US$103.63 per barrel in 2022.
"This decline can largely be attributed to a general downturn in global oil prices throughout the review period, highlighting the need for the government to implement strategies aimed at optimising revenue generated from the oil sector.
"Such measures are crucial for maintaining financial stability and ensuring sustainable development in the face of volatile market conditions."
It noted also that a global comparison of NNPC Limited monthly average crude oil selling prices in 2023 shows that the crude prices are higher than other international institutional pricing frameworks for seven months.
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It added that NNPC Limited sold a total of 196.344 million barrels of crude oil in 2023, compared to 176.012 million barrels in 2022.
"These sales were for NNPC Ltd in its capacity as the assignor of the Federation JV assets, PSC profit oil for the federation and in-kind liftings for NUPRC and FIRS.
"The federation's entitlement significantly dropped by 81.222 million barrels (74%) due to the impact of the transfer of JV assets to NNPC Limited," the report stated.
