As part of efforts to collaborate effectively in ensuring timely resolution to challenges of Nigeria’s oil and gas industry, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, recently met with the management of Midwestern Oil and Gas Limited.
The meeting held at NNPC headquarters Abuja provided a platform to chart a path towards the industry’s success. The Group Managing Director/ CEO of Midwestern Oil & Gas Company limited, char le so di ta, who declared support for the new GMD’S transformation agenda, enumerated some challenges faced by operators in the industry. Odita noted that the current spate of pipeline vandalism coupled with a high rate of crude theft was stunting the sector’s growth.
According to Odita, “As much as over 40 percent loss of crude was experienced about three months ago and this amounts to significant revenue loss to companies and the government.” He acknowledged the government’s efforts towards addressing this issue and urged that more effort be put into this to tackle and reduce if not eradicate these thefts.
In addition, Odita identified Over Riding Royalty Interest (ORRI) computation as another major challenge confronting the industry, noting that in the past, when the laws were written, it was stated that ORRI payment was based on production at the wellhead. As at then, this was exactly the same volume as injection at terminal.
Over time, companies have recorded significant difference between wellhead and terminal injection due to losses and crude theft as such he proposed that NNPC should compute ORRI based not on wellhead production volumes but on terminal injection.
