EternalTruths:


I know about the 60% and 54% rule

Tell him to calculate again using Buhari's $38 and not the $20 I suggested.


He is trying to be smart.


$38 * #199* 365*570240= 1,573,936,531,200 trillion naira

Why did Buhari lied by saying 830 Billion naira.


So who is fooling who.?


Don't tell me cost of production is $20 without fact

You have a point bro, because the calculations should be based on accrued revenue and not net ( following deductions of production costs) because if the analysis has to be done along Jokay07's line of reasoning, total average cost of production for Nigeria is in the region of 31 dollars a barrel, 15 dollars as cost of production and 16 dollars of operational expenses.

So his calculation should have been done using 7 dollars and not 20 dollars as he has shown.

AZeD1:

He didn't say it $20, read his post very well with an open mind.

What I am asking him to do is to back that figure with fact base on a reliable source.


The real production cost could be $5 or more or less

No problem

Just back your figure with fact base on a reliable source.



I will accept defeat if he can provide fact base on a reliable source.

NavierStokes:


You have a point bro, because the calculations should be based on accrued revenue and not net ( following deductions of production costs) because if the analysis has to be done along Jokay07's line of reasoning, total average cost of production for Nigeria is in the region of 31 dollars a barrel, 15 dollars as cost of production and 16 dollars of operational expenses.

So his calculation should have been done using 7 dollars and not 20 dollars as he has shown.

Thank you


Let someone post a link to a reliable source that will tell us the real production cost of oil.

EternalTruths:


Thank you


Let someone post a link to a reliable source that will tell us the real production cost of oil.

Currently looking for one I had from last month splitting the costs by production and operating expenses and ranked by countries.


Found:
http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL

EternalTruths:


Thank you


Let someone post a link to a reliable source that will tell us the real production cost of oil.

I still haven't found the table I was referring to, but herr below is Lai Mohammed and ACN cum APC's cost per barrel put at $35.

https://www.nairaland.com/1206359/economy-brink-collapse-acn-warns


But I still repeat that when operating expenses are factored in then the costs average 31 dollars a barrel.

EternalTruths:


What I am asking him to do is to back that figure with fact base on a reliable source.


The real production cost could be $5 or more or less

No problem

Just back your figure with fact base on a reliable source.



I will accept defeat if he can provide fact base on a reliable source.

He said onshore can be as low as $10 while offshore can be as high as $25. The $18 he used was an average.

Jokay07:

1. The Federal government budget is the Budget of the federal government alone. Not
the Budget of the country.
Thus from the Nigeria sharing formula, the Federal government takes about 54% of the total oil revenue accruing to the country
(Nigeria Federation).


2. Most of the oil production in Nigeria are JV and PSC. Using the JV template, Nigeria (the federation not Federal govt) only owns 60% of the oil produced and the Oil companies owns the remaining 40% of the oil produced per day . thus the 2.2 million per day, only is 0.6*2.2million=1.32million belong to Nigeria (The federation).
Federal govt share (Potential) =
0.54*1.32million=712,800 per day.


3. The actual average production per day is about 80% of the Potential production this is because of 20% shutdown for maintenance, unplanned shut downs, pipeline vandalisation etc.
Thus the Federal govt actual average production per day = 0.8*712,800=570,240.


4. Today the average cost of production per barrel in Nigeria is about $18 per barrel. Actually some onshore field cost are as low
as $10 per barrel while some deep offshore and shallow offshore cost are as high as $25 dollar per barrel. Today more than 60% of
Nigeria crude are from Offshore. thus using an average cost of $18 per barrel is realistic.
Thus out of the $38 dollar per barrel price of oil, the net revenue to the govt is about $20 per barrel. thus the expected revenue to federal government from direct sales of Crude oil in 2016 is:
= $20 *199naira/1$ *570240*366*billion/1000000000= 830billion naira
From my estimation the Federal government expected revenue from direct oil sales is about 830billion naira which is very close to 820 billion naira estimated from federal
government.
However, this is not all the federal govt get from having oil in this country. The oil companies pay company tax in hunderds of
billion of naira. But the govt choose to call it company tax
because other companies that are not oil companies pay tax too. However the company Tax of oil companies is about 85%
of their profit. Thus of the about 1.5 trillion naira expected revenue from Company Income Tax (CIT), Value Added Tax (VAT),
Customs and Excise duties, and Federation Account levies, about 50% of it are coming from oil companies.
Also another reason the govt is not getting much more currently from Direct oil sales is because of "Carry agreement" Most of the recent oil development and
investment in the last ten years on JV contract are mostly done on "Carry agreement".
Carry agreement is the contract between the govt through NNPC and Oil companies whereby the Oil companies provide all the
fund to invest in new field development (Instead of NNPC providing 60% of the cost),
and then the companies recover their money by collecting part of the federal govt oil share over time. That means some of the
oil that would have got to the Federal govt today have been collected by the federal govt ahead of time in the past. So they get less today.

https://www.nairaland.com/2820830/why-oil-revenue-2016-budget#41298195
I hope this information will cure your ignorance on this. Nobody is trying to dupe you. And you suppose to be wondering why you are the only one thinking about this calculation, well the answer is simple. It's because you are the only one chilling on the throne of ignorance!!
Apart from that, I can boldy assure you that with President Buhari - your money is safe!!

Nice analysis. However, I get this nagging feeling that you worked towards the N830b without necessarily believing in the truth of what you wrote. Pardon my scepticism, but I have in my experience seen situations where even accomplished scientists tailor evidence to suit their aims. I may be very wrong here though. But here are the reasons for my suspicions:

1. You seem to be calculating profits (38-20) instead of oil revenue, When we are clearly dealing with revenues.
2. Average cost of production in Nigeria was about 31.6 USD from a CNN report released in November. http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL
This is not surprising considering the costs incurred on security, unplanned shutdowns due to vandalism, and corruption in operating the producing assets. Can you provide a link that says it's 20 USD?
3. While it is true that government owns about 60% of JVs, you intentionally omitted the petroleum profit tax paid by other members of the JVs. Doesn't that also qualify as oil revenues? How about the petroleum profit tax from the PSAs.

I do not know how N820 billion was arrived at. I will love to see a credible analysis explaining that sum.

EternalTruths:


You are still not making sense

Provide evidence of how much it cost to produce a barrel of oil.

You can't come online and quote figures without backing the figure with fact


If you say it cost $18 to get a barrel of oil, provide evidence of it.


I asked for evidence .




If you provide evidence of your figure from a reliable source, I will accept you are right.


Because the true figure could be $5 and not $18 dollar you quoted.

you could have used the google on your phone to browse and make researches about onshore and offshore activities in the oil and gas sector before you open a thread to spill the puss of your ignorance and illiteracy!! Take care, kid!!

What is so complicated in that simple and little analysis? Truly we need to revamp our education sector.

http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL

The link I was looking for.

@ Jokay07

On my point 3, after taking a second look at your post, I see you actually addressed it. It is very surprising to me that government would claim that petroleum profit tax is non oil revenue. I can't see how that makes sense. I'd love to be enlightened on the rationale behind that. Saying other non oil companies pay tax is not a logical justification for why petroleum profit tax should be classified as non oil revenue. I'm sure that's self evident.

GiantParrot:


Nice analysis. However, I get this nagging feeling that you worked towards the N830b without necessarily believing in the truth of what you wrote. Pardon my scepticism, but I have in my experience seen situations where even accomplished scientists tailor evidence to suit their aims. I may be very wrong here though. But here are the reasons for my suspicions:

1. You seem to be calculating profits (38-20) instead of oil revenue, When we are clearly dealing with revenues.
2. Average cost of production in Nigeria was about 31.6 USD from a CNN report released in November. http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL
This is not surprising considering the costs incurred on security, unplanned shutdowns due to vandalism, and corruption in operating the producing assets. Can you provide a link that says it's 20 USD?
3. While it is true that government owns about 60% of JVs, you intentionally omitted the petroleum profit tax paid by other members of the JVs. Doesn't that also qualify as oil revenues? How about the petroleum profit tax from the PSAs.

I do not know how N820 billion was arrived at. I will love to see a credible analysis explaining that sum.

Excellent write up brother, a bottle of red wine for your Christmas meal, from me to you.

Eledan:


When you see a former GEJ till 2019 miscreant but now an IPOB youth giving an advice on how to run Nigeria, something is amiss
Just look at the shallowness behind his thoughts for the government not to borrow.

That guy has over 10 monikers on NL

Jobless IPOB youth

And as always, they are all illiterates

Let me "borrow" your wisdom. Make a really bad situation terrible just to test the performance of his cabinet. Then borrow 7 times what you initially wanted to borrow to right the error? And you know fully well, the borrowing isn't a one time thing.

Jokay07:
you could have used the google on your phone to browse and make researches about onshore and offshore activities in the oil and gas sector before you open a thread to spill the puss of your ignorance and illiteracy!! Take care, kid!!

You lost

I caught you off guard

Next time think before you attack


You want to defend a government without fact


You think we are all illiterates.

NavierStokes:
http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL

The link I was looking for.

Thanks for the link.

So I wonder where he got his figure from

Jokay07:
What is so complicated in that simple and little analysis? Truly we need to revamp our education sector.

They are challenging the authenticity that 820 is the accrued revenue from oil as claimed by PMB
This is a different thing altogether

EternalTruths:


Thanks for the link.

So I wonder where he got his figure from

If it is $31 per barrel Nigeria must borrow!

baralatie:

If it is $31 per barrel Nigeria must borrow!

Certainly


But you know NNPC is full of lies secrecy and fraud.

GiantParrot:
@ Jokay07

On my point 3, after taking a second look at your post, I see you actually addressed it. It is very surprising to me that government would claim that petroleum profit tax is non oil revenue. I can't see how that makes sense. I'd love to be enlightened on the rationale behind that. Saying other non oil companies pay tax is not a logical justification for why petroleum profit tax should be classified as non oil revenue. I'm sure that's self evident.

that could better explained under the tax system but i fink it's becauce the revenue is not generated from direct sales of crude oil

EternalTruths:



He has to study his ministers so as not to end up like Jonathan


I don't trust all his ministers since they have being accused with facts of misappropriation of funds at state level

Except he too is a hypocritical thief, will he proceed without first studying those around him.


Finally he must complement it with True Federalism

yes,true federalism....if that is not practiced in this nation then we will keep wasting our time

baralatie:

They are challenging the authenticity that 820 is the accrued revenue from oil as claimed by PMB
This is a different thing altogether

The mistake I made was to reply him. I thought my explanation would unyork his foolishness and open his eyes but I later see that No amount of tutelages can turn loose someone who derives pleasure from orchestrating ignorance at all axes.
Is it not funny to see some clowns challenging the structure and accuracy of a National budgets prepared by Ministry of Budget and National planning whic was presented openly not only to the senates but to the whole world to see and assess?
tell me, is it not funny?
If the president has the stealing our national money, will he do that by inflating figures in the National budget which he would himself present to the whole Nigerians and the media to see?
Only Ethernatruth believes that the President wants to steal our money by inflating figures in the budget- what a resounding stupidity cum ignorance.
Like I said, the kid needs to go back to school and resist for Waec.
Even my cousin in Secondary school was laughing when I showed him what that dummy posted on Nairaland.
I REST MY CASE!!

Funny thread indeed. tuale4u gave this whole analysis in some other thread. Which was a very good job but missed out on some things. These are my little additions though.

1. Production cost to produce one barrel was about $18. So the new $31 is still quite arguable even if u mention vandalism and other security concerns. Shale guys produce at about $38 per barrIel(so won't break even if they start exporting). Countries like in the middle east as low as $10 per barrel, so would still break even if crude falls to $20 per barrel.
2. The production cost is shared by the FG and operators 60:40. Just like the profit.
3. Operational cost dropped in the last one year as NAPIMS direct all operator to reflect this in all their expenditure. NAPIMS and DPR check each ticket to ensure strict compliance. Also expect further drop this year. The reason for job cuts and all
4. Lets not stop here, lets take it to the national assembly if the correct figures are not reflected.

Merry Christmas

EternalTruths:


Certainly


But you know NNPC is full of lies secrecy and fraud.

Nnpc inability to sustain its four refineries in 80% capacity,yes but to inflate crude oil sales.I doubt

I have tried my possible best to enlighten some people here, I gave them an opportunity to sip from the fountain of knowledge but they refused.
But If you still think that the President is planning to steal our money by inflating some figures and miscalculation in the National Budget he presented openly to the Senate, entire Nigeria and to the whole world which everybody saw it both in home and abroad, in Apc, Pdp and even Kowa party - then feel free to go to the media and announce it and challenge it, in fact I ready to donate any amount of money to get it published and broadcasted in the media.

If you think that those who calculated the National Budget made some mistake by miscalculating our oil revenue money then please 'pm' / contact me @ 'jokay07@yahoo.com' cus I am ready to do everything humanly possible to get it broadcasted on the media.
THANKs!!!

Jokay07:
I have tried my possible best to enlighten some people here, I gave them an opportunity to sip from the fountain of knowledge but they refused.
But If you still think that the President is planning to steal our money by inflating some figures and miscalculation in the iNational Budget he presented openly to the Senate, entire Nigeria and to the whole world which everybody saw it both in home and abroad, in Apc, Pdp and even Kowa party - then feel free to go to the media and announce it and challenge it, in fact I ready to donate any amount of money to get it published and broadcasted in the media.

If you think that those who calculated the National Budget made some mistake by miscalculating our oil revenue money then please 'pm' / contact me @ 'jokay07@yahoo.com' cus I am ready to do everything humanly possible to get it broadcasted on the media.
THANKs!!!

Naaa
It is all the part of the power behind naira land politics.it has its roots in challenging virtually the statements from our political elites.
For example! We where working with a $10 fee and $25 offshore but what do we have a source with a figure $31.
If I know naira land that figure would be haunted to death but because of chanters....!
Again the budget has its own "gbege"
The fig by PMB states"#3.8 trillion as revenue and 2.2 trillion as deficient(covered as loan) to form a #6.08 budget but what is on ground is
"#3.78trillion revenue and #1.84 loan component totalling #5.62trio as budget".
I am just watching the whole scenario though.

NavierStokes:
http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL

The link I was looking for.

You links states that production cost for Nigeria is $31.60 while that of UK is $52.5 . Does it make sense that production cost of the UK is higher than the current market price of Brent crude, which is $37.89 per barrel. So how come the UK is selling at a loss of $15 per barrel? Are you insinuating that Nigeria and the oil companies presently share a profit of less than $10 per barrel?

During the 80s, crude hardly broke the $30 barrier, at on time it went as low as $8, so why were oil companies still in business?

wirinet:

You links states that production cost for Nigeria is $31.60 while that of UK is $52.5 . Does it make sense that production cost of the UK is higher than the current market price of Brent crude, which is $37.89 per barrel. So how come the UK is selling at a loss of $15 per barrel? Are you insinuating that Nigeria and the oil companies presently share a profit of less than $10 per barrel?

During the 80s, crude hardly broke the $30 barrier, at on time it went as low as $8, so why were oil companies still in business?

Ha ha ha ha ha
Little wonder people believe just about any info thrown out there such as "a million barrels of crude stolen per day etc.".
I recall our petroleum Economics professor from the Colorado School of Mines saying even the best guys who do the oil and gas calculations most times are intrigued the way the numbers work.
Production cost of oil my brother, comprises of the OPEX and the CAPEX, the CAPEX of today has already been invested years ago and that investment has been spread over time. That is the reason why at a time like this in high cost countries, most oil companies cut back on making investments but rather chose to lift oil from the ground, because for the period the direct cost incurred will be the opex ( cost of administration, salaries and lifting oil from the ground and sending to the terminals) but the
CAPEX not to be neglected.
Let me shock you with info from a discussion I had with someone years ago, someone high up one of the major oil producers in Nigeria: "for every $100 dollars of sales our company makes, we get $3 out of it, I don't understand how we manage to make money but we do make money" and no IOC makes more than this company in Nigeria. You should be able to figure out.


In summary the oil and gas business is one where the numbers can sometimes be seen to appear like magic, reality and appearance are intertwined in this world.

NavierStokes:


Ha ha ha ha ha
Little wonder people believe just about any info thrown out there such as "a million barrels of crude stolen per day etc.".
I recall our petroleum Economics professor from the Colorado School of Mines saying even the best guys who do the oil and gas calculations most times are intrigued the way the numbers work.
Production cost of oil my brother comprises of the OPEX and the CAPEX, the CAPEX of today has already been invested many years and that investment has been spread over time. That is the reason why at a time like this in high cost countries, most oil companies cut back on making investments but rather chose to pump out oil from the ground, because for the period the direct cost incurred will be the opex ( cost of administration, salaries and lifting oil from the ground and sending to the terminals).

Let me shock you with info from a discussion I had with someone years ago, someone high up one of the major oil producers in Nigeria: "for every $100 dollars of sales our company makes, we get $3 out of it, I don't understand how we manage to make money but we do make money" and no IOC makes more than this company in Nigeria. You should be able to figure out.


In summary the oil and gas business is one where the numbers can sometimes be seen to appear like magic, reality and appearance are intertwined in this world.

Very very very true.

baralatie:

Naaa
It is all the part of the power behind naira land politics.it has its roots in challenging virtually the statements from our political elites.
For example! We where working with a $10 fee and $25 offshore but what do we have a source with a figure $31.
If I know naira land that figure would be haunted to death but because of chanters....!
Again the budget has its own "gbege"
The fig by PMB states"#3.8 trillion as revenue and 2.2 trillion as deficient(covered as loan) to form a #6.08 budget but what is on ground is
"#3.78trillion revenue and #1.84 loan component totalling #5.62trio as budget".
I am just watching the whole scenario though.

Thanks


Don't mind the guy

He thinks he can come online to quote imaginary figures without fact to back up his $18 production cost and expect people like us to clap for him.

Imagine that it took a link from navierstokes to bring him down from his high horse.


People defending the indefensible.