Nigerian National Petroleum Corporation

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Nigerian National Petroleum Corporation
State-owned enterprise
Industry Oil and gas
Founded 1977
Headquarters Abuja, Nigeria
Products Crude Oil, Gas, petroleum productss, petrochemicals,
Website www.nnpcgroup.com

The Nigerian National Petroleum Corporation (NNPC) is the oil corporation through which the federal government of Nigeria regulates and participates in the country's petroleum industry.

History[edit]

NNPC was established on April 1, 1977 as a merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel. NNPC by law manages the joint venture between the Nigerian federal government and a number of foreign multinational corporations, which include Royal Dutch Shell, Agip, ExxonMobil, Chevron, and Texaco (now merged with Chevron). Through collaboration with these companies, the Nigerian government conducts petroleum exploration and production. In 2007, the head of the Nigerian wing of Transparency International said salaries for NNPC workers were too low to prevent graft.[1]

The NNPC Towers in Abuja is the headquarters of NNPC. Consisting of four identical towers, the complex is located on Herbert Macaulay Way, Central Business District Abuja. NNPC also has zonal offices in Lagos, Kaduna, Port Harcourt and Warri. It has an international office located in London, United Kingdom.

NNPC Organisational Structure[edit]

The NNPC Group comprises the NNPC Board, the Group Managing Director's office, Four Directorates as listed below. Each of the Directorates is headed by a Group Executive Director (GED). Its Divisions are headed by Group General Managers (GGM) while its subsidiary companies are headed by Managing Directors. NNPC has several subsidiaries, two partly owned subsidiaries and 16 associated companies.

Directorates:

  • Exploration and Production
  • Refining and Petrochemicals
  • Commercial and Investment
  • Finance

Divisions and Subsidiaries:

Divisions Subsidiaries
National Petroleum Investment and Management Service (NAPIMS) Nigeria LNG Limited (NLNG)
Cost Engineering Division (CED) Nigerian Petroleum Development Company (NPDC)
Research and Development (R&D) National Engineering and Technical Company (NETCO)
Engineering & Technology Division (ETD) Pipelines and Products Marketing Company (PPMC)
National Frontiers Exploration Services (NFES) Nigerian Gas Company (NGC)
Liquefied Natural Gas Division Integrated Data Services Ltd (IDSL)
Group Public Affairs Division (GPAD) Warri Refining and Petrochemicals Company Ltd (WRPC)
Special Projects Kaduna Refining and Petrochemicals Company Ltd (KRPC)
Renewable Energy Division (RED) Port Harcourt Refining Company (PHRC)
Nigerian Content Division (NCD) NNPC Retail Ltd
Upstream Business Development Division Nigeria-Gazprom Ltd (NiGaz)
Group Human Resources Division NIKORMA Transport Ltd (NIKORMA)
Audit Division NIDAS Marine Limited
Information Technology Division Hydrocarbon Services Company Nigeria Ltd (HYSON)
NNPC Medical Services NNPC Pension Fund Ltd
Corporate Planning and Development Division Duke Oil Services Ltd (UK)
Gas Master Plan Calson Bermuda Ltd
Greenfield Refineries NNPC Properties Ltd
Power Division Brass LNG Limited
Finance Division
Crude Oil Marketing Division (COMD)
Accounts Division
Downstream Business Development Division
Regulatory & Policy Compliance

Installations[edit]

NNPC has sole responsibility for upstream and downstream developments, and is also charged with regulating and supervising the oil industry on behalf of the Nigerian Government. In 1988, the corporation was commercialised into 11 strategic business units, covering the entire spectrum of oil industry operations: exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments. The subsidiary companies include:

Legal premise[edit]

Main article: Energy law

According to the Nigerian constitution, all minerals, gas, and oil the country possesses are legally the property of the Nigerian federal government. As such, the oil corporations operating in Nigeria appropriate portions of their revenue to the government, which accrues nearly 60% of the revenue generated by the oil industry in this manner. The revenue gained by the NNPC accounts for 76% of federal government revenue[1] and 40% of the entire country's GDP. As of 2000, oil and gas exports account for 98% of Nigerian export earnings.[citation needed]

Corruption at the NNPC[edit]

KPMG Report[edit]

In December 2011, the Nigerian government permitted a forensic report conducted by KPMG to be published. The audit, commissioned by the Ministry of Finance following concerns over the NNPC’s transparency, detailed the NNPC’s sharp business practices, violation of regulations, illegal deductions of funds belonging to the state, and failure to account for several billions of naira that should go to the federation account.[2]

Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5 billion. It has not been able to account for the sum ever since.[3]///

Willbros Group Inc[edit]

In May 2008, Willbros Group Inc, a US company, admitted to making corrupt payments totalling over $6.3 million to officials at the NNPC and its subsidiary NAPIMS, in return for assistance in obtaining and retaining contracts for work on the Eastern Gas Gathering System (EGGS).[4]

ABB Vetco Gray[edit]

In July 2004, ABB Vetco Gray, a US company, and its UK subsidiary ABB Vetco Gray UK Ltd, admitted to paying over $1 million in bribes to officials at NNPC subsidiary NAPIMS in exchange for obtaining confidential bid information and favourable recommendations from Nigerian government agencies.[5]

Trafigura and Vitol[edit]

In November 2013 after a report was published by Swiss Non-governmental advocacy organization - Erklärung von Bern - allegations of heavy fraud surfaced, placing the NNPC under suspicion of siphoning off $6.8 billion in crude oil revenues.[6][7][8]

Unremitted Funds[edit]

On the 9th of December 2013, a letter from the Central Bank of Nigeria (CBN) Governor to the President of Nigeria, Goodluck Ebele Jonathan, dated 25 September 2013 showing details that the NNPC had not remitted over $49.8 billion proceeds of crude oil sales to the Government surfaced. On December 13, 2013, NNPC responded that no money was missing. Reconciliation Committee (comprising representatives of (i) CBN (ii) NNPC (iii) DPR (iv) FIRS (v) OAGF (vi) The Budget Office of the Federation (vii) Federal Ministry of Finance (viii) Federal Ministry of Petroleum Resources) was set up.[9]

The Reconciliation Committee estimated unremitted funds at $10.8bn on 18th December 2013 while CBN changed its claim to $12bn. CBN then informed senate committee on Finance on 4th of February 2014 that NNPC needs to account for $20bn as the CBN could only confirm receipt of $47bn out of $67bn revenue for the period under review. The then Finance Minister recommended the conduct of an independent Forensic Audit and PwC was officially appointed by the office of the Auditor General of the Federation (AuGF) to conduct a forensic audit into the allegations.[9]

Among the conclusions reached by PwC at the end of their work, as stated in their report, which was made public are:

1. Total cash remitted into the Federation accounts in relation to crude oil liftings was $50.81bn and NOT $47bn as earlier stated by the Reconciliation Committee for the period from January 2012 to July 2013.[9]

2. NNPC has provided information on the difference leading to a potential excess remittance of $0.74 billion (without considering expected remittances from NPDC). Other indirect costs of $2.81 billion which were not part of the submission to the Senate Committee hearing have been defrayed to arrive at this position.[9]

3. A major consideration centers on the ownership of oil and gas assets controlled by NPDC. Subject to additional information being provided, we estimate that the NNPC and NPDC should refund to the Federation Account a minimum of $1.48billion as summarised in the next page. [9]

No staff of the NNPC or Ministry of Petroleum has so far been punished, though on Thursday, 20 February 2014, the whistle-blowing CBN Governor was suspended from office by the President.

References[edit]

  1. ^ a b "Reforming the oil industry". The Economist (The Economist Newspaper Limited). 2007-09-29. 
  2. ^ Musikilu Mojeed (9 December 2011). "Monumental Oil Subsidy Fraud And Corruption At The NNPC-The Damning KPMG Report :Premium Times". Sahara Reporters. 
  3. ^ ENERGY AND NATURAL RESOURCES (22 November 2010). "Current State Assessment Report on the Process and Forensic Review of the Nigerian National Petroleum Corporation (Project Anchor)" (PDF). Federal Ministry of Finance. 
  4. ^ Department of Justice (14 May 2008). "Willbros Group Inc. Enters Deferred Prosecution Agreement and Agrees to Pay $22 Million Penalty for FCPA Violations". Department of Justice. 
  5. ^ Department of Justice (6 July 2004). "ABB VETCO GRAY, INC. AND ABB VETCO GRAY UK LTD. PLEAD GUILTY TO FOREIGN BRIBERY CHARGES". Department of Justice. 
  6. ^ http://premiumtimesng.com/news/149471-nigeria-lawmakers-order-probe-nnpc-swiss-oil-dealers-6-8-billion-scanda.html
  7. ^ http://www.thisdaylive.com/articles/house-probes-collusion-between-nnpc-swiss-and-nigerian-traders/164208/
  8. ^ http://www.swissinfo.ch/eng/business/Traders_collude_in_oil_corruption,_says_Swiss_NGO.html?cid=37260152 NOV 4, 2013
  9. ^ a b c d e PwC Final Report on NNPC forensic audit 2015 (PDF). Vanguard Newspaper Download of PwC Report (Report) (Price Waterhouse Coopers). April 2015: 199. Retrieved 25 August 2015. Investigative Forensic audit of crude oil revenues and remittances by Nigerian National Petroleum Corporation (NNPC) (January 2012 – July 2013)

External links[edit]