The Nigerian Upstream Regulatory Commission (NUPRC) has revealed that approximately 40 percent of the volumes credited to crude oil loses in the Nigerian petroleum industry are actually attributable to measurement inaccuracies in the oil fields and export terminals and not theft as often reported.
Engr Gbenga Komolafe, Chief Executive of the Nigerian Upstream Regulatory Commission (NUPRC), stated this in Lagos at the Petroleum Club Quarterly Dinner, during the weekend.
According to him, this revelation followed a forensic audit conducted by the Commission covering the period from January 2020 to November 2022 on crude theft numbers. He said that the audit was to ascertain with accuracy the stolen volume of crude oil within the reference period.
Engr. Komolafe while delivering a speech on “Nigerian upstream petroleum sector: value optimization, energy transition, and regulatory perspectives”, said the Commission is committed to dealing with the issue of metering errors by ensuring that Original Equipment Manufacturers (OEMs) licensed directly as agents of the Commission will be responsible for the deployment and maintenance of metering facilities across Nigeria’s oil and gas facilities, for transparency in hydrocarbon accounting.
He said, “The reform measure adopted by the Commission offers a paradigm shift from the trajectory in Nigeria’s hydrocarbon measurement since oil was discovered in Nigeria in Oloibiri in 1956, and is aimed at ensuring that no one becomes a judge in his own case.
“Admittedly, one major area of value erosion in the industry is the menace of crude oil theft. Our records indicate that the menace of oil theft has negatively impacted the oil and gas sector for about two decades with attendant huge financial losses to our nation.
Komolafe noted that the Commission, in collaboration with the various arms of the Security forces, the NNPC Limited and the host communities, have been able to suppress the ugly trend of hydrocarbon value decimation.
He further said, “Now, our nation has continued to record good dividends of these collaborative efforts as production figures are progressively increasing.
“The January 2023 volume is approximately 1.5 million barrels per day of oil and condensates. It is expected that this number will continue to increase as further measures are introduced and sustained to remove all illegal connections that aid crude oil theft.
“Currently, Nigeria is flaring about 10% of gas produced, a feature the Commission is also determined to eliminate through the ongoing Gas Flare Commercialization Programme (GFCP).
“Nigeria produces about 8BSCF/D of gas, out of which approximately 20% is delivered to the domestic market, approximately 40% is exported to international markets, 30% is utilised for the producer’s internal consumption and the excess gas is flared.
“In alignment with our objectives, as outlined in Section 6 of the Petroleum Industry Act, the Commission is diligently pursuing the basic regulatory goals which include: increasing Nigeria’s oil and gas reserves and production, developing a transparent approach to hydrocarbon accounting, and attaining operational efficiency and effectiveness in industry operations.
The NUPRC boss said that the Commission is committed to facilitating peace and harmony in the host communities to guarantee a conducive operating environment for investors, positively impacting operating costs and attracting more investment opportunities.
Komolafe outlined the measures undertaken by the Commission to include, Strategic Actions for Hydrocarbon Value Optimization, which has to do with the issuance of licensing round guideline and published a licensing round plan for a total of seven open blocks (300-DO, 301-DO, 302-DO, 303-DO, 304-DO, 305-DO & 306-DO).
He said, “We are currently evaluating the Expression of Interest (EOI) received from prospective investors. The exercise is indeed expected to be a huge success for Nigeria and a big step towards growing the nation’s oil and gas reserves. This will be done through aggressive exploration and development efforts.
“Also, as part of our strategy for value optimization and increased production from our national oil and gas reserves, the Commission has focused on regulatory initiatives aimed at reviving declining wells through enhanced oil recovery approach. We are working with operators to identify candidate wells and appropriate interventions that would lead to increased production.
“In addition, the Commission is focusing on shut-in wells that can be revived. In pursuance of this, The Commission inaugurated a committee on June 23, 2022, to conduct an industry-wide study on the reactivation of shut-in strings.
“The committee has submitted its report and includes recommendations categorised into Quick Wins, Medium and Long-Term initiatives that will enhance national oil and gas production volumes.
Engr Komolafe further noted that the findings of the Commission from the Committee’s report revealed that over 900,000 barrels of oil per day can be earned from the quick win interventions while the medium and long-term initiatives could potentially add 1.2 million barrels of oil per day, if properly and fully implemented.
He added that the total number of strings that need to be revived is also known and that the Commission has commenced engagement with the relevant operators to operationalize the initiative.