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Adewale Sanyaolu
Efforts to shore up the country’s revenue profile may have yet recorded a further setback as the Nigeria Extractive Transparency Initiative (NEITI) has raised the alarm that about $4.1 billion had been lost to poor crude oil production metering.
Indeed, the watchdog and other stakeholders at a strategy meeting and presentation of report on metering infrastructure for the oil and gas sector insisted that limitations in the metering of crude oil production could continue to pose a threat for nation’s revenue target.
Participants at the strategy session argued that without urgent actions to address the situation, the rising crude theft in the nation’s oil sector may persist.
At different times, disagreement between the industry regulator- Department of Petroleum Resources (DPR), Central Bank of Nigeria (CBN) and other government revenue generating agencies, including the Customs Service and Federal Inland Revenue Service (FIRS) has become a recurring decimal.
Each of these agencies brandish different crude oil production figures which often distort revenue collection figures, a development stakeholders have described as a national embarrassment.
But those familiar with the business of metering in the oil and gas sector have argued that the challenge dates back to the days oil was first discovered in Oloibiri, in present day Bayelsa State in 1953 although the Nigerian Association of Petroleum Explorationists appears not to buy the idea.
NEITI’s red flag
NEITI submitted that metering infrastructure in the oil and gas sector is the only way to ensure accurate measurements of daily crude oil production in the country.
According to Executive Secretary of NEITI, Mr Waziri Adio, Nigeria is the only country that produces oil without meters at well-heads to ascertain the accurate quantity of crude produced at any given time.
Adio believes that installing the facility had become imperative for a government that is looking for ways and means to fund its budgets.
“There is the need for us to take appropriate measures to realise the full revenue potential accruing from the production of crude oil and one way to that is to know the quantity of oil we produce.” He argued.
Industry experts are trying to convince us that we are on good standing with what we have right now but we think that we are not, we think that the infrastructure measurement for the crude oil that we produce are not adequate and that it can be improved upon,’’ he said.
Adio represented by the Director of Communications, Dr Orji Ogbonnaya, noted that crude oil theft would also be reduced with installation of metering in the various oil fields in the country.
He added that it was unfortunate that after many years of oil production, the country could not independently verify its oil production levels but relies largely on international oil companies (IOCs) to do so.
“Stealing of Nigeria’s crude could be minimised if we know exactly what we produce, what we consume locally and export internationally, and these have occurred over the years in NEITI’s audit reports.
“NEITI will be comfortable when our country gets maximum benefits from the oil and gas we produce and we think a lot of gaps exist and one of it is that we do not know the quantity of oil that we produce.” he added.
The oil and transparency agency had earlier disclosed in its audit reports of operations in Nigeria’s oil sector for 2012, 2013, 2014, and 2015, that a total of $9,896,794,799 ($9.89 billion) worth of crude oil was lost to inadequate measurement of oil produced as a result of poor metering infrastructure.
It explained that for the period, up to 106,861,842 million barrels of oil were not adequately accounted for.
Presenting the report, Dr. Sunday Kanshio, a member of the study team, said that most of the oil production sites, the team visited during its research, were found to have no meters at their well-heads in breach of the 1969 Nigeria Petroleum Act.
Kanshio further disclosed that the team discovered that there were no infrastructure in place to accurately determine the volume of crude oil or product stolen or lost in the country.
He called for proper regulations to enable government get necessary infrastructure that would help the country know the quantity of crude produced and sold at the international market.
He advised that Nigeria needed to emulate other oil producing countries like Saudi Arabia, Kuwait, UAE for effective management of the oil and gas sector for economic growth and development in the Country.
Meanwhile the Executive Director of the African Centre for Leadership, Strategy and Development, Dr. Otive Igbuzor, said that effective hydrocarbon management could be hinged on three key areas of Fiscal regime, Regulation and metering infrastructure.
Otive, a member of the research team, said that it was unfortunate that the oil and gas industry in Nigeria was yet to get the three right, adding that the major focus of the meeting was to present the report and the recommendations and to agree on increasing the advocacy based on the evidence from the study.
NAPE, others provide insight
Publicity Secretary of NAPE, Mr. Lateef Amodu, said it was impossible to have an oil terminal without meters since terminals are a repository for all production a storage facility of sort.
He said what the industry was canvassing for, was to have meters at all critical points, starting from the well-heads to manifolds and any of the hubs down to the tanks.
This, he said, maybe impossible due to cost and ageing infrastructure of some of crude pipelines conveying oil to its final destination.
‘‘ There is financial implication to metering at every point before it gets to its final destination. Every oil and gas firm is monitoring what it’s producing and collecting at the tank.
If that is not done how would they and their partners monitor what is produced and what they are paid for at the end of the day. There is no incentive for a producer not to know what he is producing.’’
The NAPE publicity Secretary said meters are not free, and does not make any reasonable sense for a producer to be told to install meters from the well all the way to the terminal.
