• Tuesday, July 16, 2024
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How NUPRC plans to curb Nigeria’s oil theft

NUPRC extends deadline for 2024 oil block licencing round by ten days

Africa’s biggest oil-producing country was jolted last month when the federal government disclosed that a total value of Nigeria’s crude oil stolen between January 2021 and February 2022 is about $3.27bn (representing N1.361tn at the official exchange rate of N416.25 to the dollar).

International oil companies and their counterparts in Nigeria complained that the massive oil theft across the country currently posed a threat to not just their existence, but to the Nigerian economy.

The federal government through the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, met with the Oil Producers Trade Section, as well as the Independent Petroleum Producers Group in Abuja at a stakeholders’ engagement on crude oil theft.

Describing the phenomenon as a national disaster, the Chief Executive of the commission, Gbenga Komolafe, told the groups that the meeting was to share information as to the actual number of crude oil losses confronted by the entities.

Although during a presentation at the event, the commission stressed that Nigeria may have lost as much as $3.27 billion to vandalism between January 2021 and February 2022, a period of 13 months, it noted that the industry figures needed to be reconciled.

In addition, it put the average monthly value lost during the period at $233.99 million, while on the average, it estimated that the country may have lost as much as $7.72 million on a daily basis.

However, Komolafe stressed that the issue of oil theft had become very critical to have divergent data on the menace, announcing that the reason for the meeting was to get all stakeholders’ view so as to confront the challenge using a common front.

“This is a one-agenda meeting and it centres on the issue of crude oil theft. The issue of oil theft has become a very worrisome one to the nation, to the government and I believe to you as investors in OPTS and IPPG, even as it is to us as your regulators.

“So, this is for us to sit at a roundtable and hear each other and share information. More worrisome, is that in recent times, we have had conflicting positions as to what is really happening in the upstream. As a responsible regulator, there’s need for us to agree on the way forward and to hear your perspective.

“We need to have accurate figures. As a government we cannot continue to use abstract or inaccurate figures in a matter as important as crude oil theft. We have set up a crack team to be able to have the information we need,” he stated.

Read also: Crude theft: Nigeria sees fresh oil spill in Bayelsa

Komolafe maintained that the challenge remained a disincentive to investment at a time Nigeria was in dire need of foreign exchange, assuring that the government was determined to make the industry more attractive for investors.

While promising positive change, Komolafe stated that no aspect of the value chain would be unattended to, saying President Muhammadu Buhari, had directed that Nigeria must be rid of the menace.

Komolafe said the government was determined to end the menace so that the country can benefit from the rising price of oil and also be able to protect the environment from oil spills.

“The concern of the government is to increase our national oil production. Basically, we are an oil economy and when the upstream is sick, it affects the wellbeing and the health of the country.

“The situation that is happening in the upstream is getting to the level of threat to the existence and wellbeing of Nigeria. As a responsible regulator, we are very concerned about it. We have been doing a lot and we are not relenting.

“We will do everything possible to increase oil production in a manner that will make the nation benefit from the upward swing in the international price of crude oil,” he noted.

Similarly, during the presentation, the commission disclosed that most of the crude oil losses came from Bonny Terminal Network, Forcados Terminal as well as Brass Terminal.

It listed factors aiding the criminal activities as: economic challenges, inadequate security, poor surveillance, poor community engagements, exposed facilities and stakeholder compromises.

The commission stated that due to the high level of theft, the country had been unable to meet its Organisation of Petroleum Exporting Countries (OPEC) production quota.

Also speaking, Senior Technical Adviser to the CEO, Abel NSA, said that the impacts of the phenomenon include loss of value-a situation where government revenue is adversely affected, increased costs-due to frequent repairs of damaged facilities and environmental degradation due to spillages by the activities of saboteurs.

On actions taken to mitigate the challenge, he said work teams had been set up to deliberate on workable solutions, identify various responsible parties and propose improvement areas.

In addition, he noted that a public, private approach was being adopted while the implementation of the provisions of the Petroleum Industry Act (PIA) was ongoing.

He noted that on the community side, the outlook was to engage, carry out awareness campaigns as well as ensure prompt payment of community contractors, while the installation of check meters, engagement of competent entities for pipelines surveillance and pipelines integrity assessment were being envisaged.

Also speaking, Chairman/Managing Director of ExxonMobil, Richard Laing who represented OPTS, maintained that the issue had grown beyond mere theft to what he described as, “organised criminality” involving sophisticated operations.

“As an industry, I know how hard my colleagues work to produce products that we need and to suffer the level of theft that we have is disheartening. But more importantly it is a threat to investments, a threat to the health of the industry and wealth of the nation

“It is important that the stakeholders integrate their activities and their thoughts. As OPTS we have met with a number of stakeholders over the last several months and we want to make sure that whatever we do is joined up and effective.

“The language is very important and I think we use theft rather quickly. I don’t think this is theft, this is organised criminal activity.

“The level of sophistication in terms of tapping into the pipelines, the distributions, efforts required to move hundreds of thousands of barrels a day isn’t some guy coming along and tapping into a pipeline and taking container crude oil. It is organised criminality,” he insisted.

Also commenting, the Independent Petroleum Producers Group (IPPG) represented by the Managing Director of Waltersmith Petroman, Chikezie Nwosu, disclosed that about 82 per cent of its members’ production was stolen in the month of February 2022.

Stressing that independent producers were facing an existential threat, Nwosu explained that the oil theft challenge had jumped from about 4 per cent in the past, to a high of 91 per cent in December, 2021.

“The TNP (Trans Niger Pipeline) is the major issue. We have seen crude theft grow from single digit percentages to reports of 91 per cent in December for some of the operators who produce into the TNP, 75 per cent in January and the February report we got has an average of 82 per cent,” he added