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Poor metering causes 40% of crude oil loss

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By Abiodun Okunloye

More than oil theft, improper measurement causes more harm to the oil industry.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed that about 40 percent of the crude oil lost in the Nigerian petroleum industry is not the result of theft but is instead the result of poor measurement. Mr. Gbenga Komolafe, the Chief Executive of the NUPRC, said this in a speech at the Petroleum Club Quarterly Dinner in Lagos. According to him, this was discovered as a result of a forensic examination of oil theft statistics that the commission undertook, covering the time period from January 2020 through November 2022.

In the oil-compassed Niger Delta area of Nigeria, the number of oil thefts has gone up in recent years. The NNPC Limited’s Group Managing Director, Mele Kyari, reported in April 2022 that oil theft in 2021 cost Nigeria $4 billion, at about 200,000 barrels per day. In September, the NNPC said that oil theft was responsible for the loss of 470,000 barrels of crude oil every month, with a total value of $700 million. Revenue from oil is underperforming, according to the government’s draft fiscal policy plan for 2023–2025, because of substantial production shortfalls and shortages caused by pipeline vandalism and crude oil theft.

Oil theft is a major setback to the oil industry, which incurs losses.

For accurate and transparent hydrocarbon accounting, he said the commission would only allow Original Equipment Manufacturers (OEMs) authorized directly as contractors of the commission to install and maintain metering systems at all of Nigeria’s oil and gas installations. The commission’s proposed reformation approach is a radical departure from the trend in Nigeria’s hydrocarbon measurement, seeing as the discovery of petroleum in Nigeria was in Oloibiri in 1956; it is designed to prevent anyone from lording over it.

More so, the threat of crude oil theft is, without a doubt, a key contributor to the industry’s declining value. According to their research, oil theft has been a serious problem in the oil and gas industry, causing enormous economic losses for the country for at least the past two decades. The horrible trajectory of hydrocarbon value degradation has been suppressed; he said, through the collective efforts of the commission, NNPC Limited, the various branches of the security forces, and the local community.

Further measures taken will increase Nigeria’s oil output.

According to Mr. Komolafe, the forensic audit’s primary objective was to precisely determine the amount of crude oil stolen within the study’s time frame. As a result of everyone’s hard work, the country is starting to reap the rewards of its efforts. In January of 2023, the supply of oil and condensation is predicted to be around 1.5 million barrels per day. Further procedures are expected to be deployed and maintained to cut off all unlawful connections that facilitate crude oil theft, therefore this output is expected to rise, he said.

A difficulty that the commission is also keen to eradicate through the present Gas Flare Commercialization Programme (GFCP), according to him, is the fact that Nigeria is flaring almost 10 percent of the gas that it produces. About 8 BSCF/D of gas is produced in Nigeria; however, only about 20% of that gas is marketed on the domestic market, nearly 40% of that gas is supplied on global markets, 30% of that gas is used for the producer’s internal usage, and the remaining surplus gas is flared.

Good operational environment will be fostered with the Act.

However, the commission’s efforts are directed toward achieving the fundamental regulatory goals, as stated in Section 6 of the Petroleum Industry Act, which includes boosting Nigeria’s oil and gas reserves and output, creating a trusting environment for hydrocarbon accounting, and maximizing the industry’s effectiveness and efficiency in operations. In addition, he said, the commission is dedicated to fostering harmony and peace in the host towns in order to guarantee a favorable working environment for investors, which would have a good effect on operating costs and encourage the inflow of additional investment opportunities.

Related Link

NUPRC: Website

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