…claims crude oil theft exaggerated, now at 120,000 bpd
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is embarking on a make-good effort on the perceived murky image of the country’s oil industry.
To this end, the NURC says that claims about the volume of oil theft in the country are grossly exaggerated and that allegations that International Oil Companies (IOCs) are refusing to sell crude to local refiners, including the Dangote Group, are unfounded.
It further ascribes the said misconceptions to administrative and technical glitches in the system, as well as misunderstood protocols guiding the running of the county’ oil sector.
Speaking in an interview on Arise News on Monday, Engineer Gbenga Komolafe, the Chief Executive Officer of the NUPRC said about 40% of what is adjudged crude oil theft are attributable to metering inaccuracies which the agency is working to fix in order to save the country billions of dollars.
He added that current crude oil theft levels in the country range between 100,000 and 120,000 barrels per day.
Industry estimates of oil theft in the country have ranged between 300,000 and 400,000 barrels per day.
Komolafe further stated that it is “erroneous” for one to say that the International Oil Companies (IOCs) are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act (PIA) has a stipulation that calls for a willing buyer-willing seller relationship.
On claims that IOCs are refusing to sell crude oil to local refineries, Komolafe said: “The issue is not that the IOCs or other liaises, other producers are refusing to make crude available. So, to the best of the knowledge of the commission, there is nothing like IOC being too big or not complying with their statutory obligations to make crude available. I think that is erroneous and I need to make that very clear. So, the IOCs and other producers, none of them is refusing to comply with the provisions of the law of the Federal Republic of Nigeria, and the commission is in no way shying away from this, so that needs to be made very clear.”
Explaining the provisions in the PIA which make it obligatory for IOCs to sell crude to refiners, Komolafe said: “Section 109 of the Petroleum Industry Act, which is one of the buildings blocks of the PIA as a comprehensive legislative instrument to govern the oil and gas industry, section 109 of the act actually provides for enforcement of domestic crude oil obligation.
“And I want to say that the Nigerian Upstream Petroleum Regulatory Commission, as the technical and commercial regulator for the industry, actually proactively came out and brought together the producers and the refiners, including the NNPC, and made it obligatory that they- that is, the producers- must ensure that they make crude available to the domestic refiners.
“So, what happens in this respect is that the NUPRC receives the volume of the domestic requirement form its sister agency, the Nigeria Mid and Downstream Petroleum Regulatory Agency, and factors this volume to the various liaises, that is, the various producers, and ensures that they make available this obligation to the domestic refiners.”
Komolafe added: “I need to say that there is a provision of willing buyer- willing seller in the PIA. So, the regulator, that is the NUPRC, is guided strictly by that provision of the law. And after the initial engagement in which of course all the refineries in the country, including the representatives of the Dangote refinery were present at that meeting, the next thing that happened is that the commission recognised the fact that the parties were not playing according to the rules of the game.
“To say the least, crude oil supply follows international principles, crude being an international citizen. And the commission came out again, and as I speak, I’ve been able to proactively put in place what we call the rules of engagement between parties, and that is already in force and that will equally be assessed from the website of the NUPRC.”
Komolafe then addressed the negative impact of crude oil theft on the country, stating that apart from reducing the volume of oil available, theft also discouraged investors from stepping into Nigeria’s onshore sector.
On efforts being made by the NUPRC to curtail crude oil theft, he said: “The NUPRC, upon assumption of duty, that is the current leadership of the NUPRC under my team being the pioneer management, we indeed commissioned an independent study, and that study revealed that as at the time, we were losing about 100,000 to 120,000 barrels of crude per day. But the good thing now is that we’ve witnessed a drastic reduction in the volume of crude oil theft that we were experiencing arising from the multi-faceted actions being taken by the general security services, the NNPC and the regulators. So, there has been concerted approach by government in trying to curtail the menace of crude oil theft in Nigeria.”
He also said that the NUPRC is going beyond the Kinetic approach to crude oil theft as the commission has come up with a regulation termed the “Nigerian Upstream Petroleum Measurement Regulation” which will ensure that engineering integrity audits will be conducted on metering stations across 187 flow stations to ensure that all meters are delivering according to Industry and liable specification standards.
“In the course of the independent integrity audit, it was revealed that about 40% of what is adjudged crude oil theft actually are attributable to what is called metering inaccuracies.
“And if this is fiscalised, we’ll realise that the nation will be saving billions of dollars annually,” he said.
