Oil theft responsible for IOCs’ divestment, NUPRC admits

By Adewale Sanyaolu

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has admitted that the activities of oil thieves was largely responsible for the decision of most International Oil Companies (IOCs) to divest their stake from onshore operations.

The Chief Executive Officer of NUPRC, Mr. Gbenga Komolafe, stated this during a live interview on Arise television on Monday.

He said that apart from the huge revenue loss to the country as a result of oil theft, the menace remains a major disincentive to investors, saying no one would want to continue injecting funds only to record losses as a result of theft.

He added that investors have now recognised that it is safer for them for move their investments from onshore to offshore terrains, reorder their portfolios and relocate to safer havens where their investment is guaranteed and protected.

‘‘That decision in itself is a pointer to the fact that the onshore terrains are more prone to crude oil theft. As a regulator and shortly when we came onboard, we commissioned a study which revealed that we are losing a lot of our production volumes to crude oil theft. It is a reality and a challenge to the country,” he said.

According to him, the independent study revealed that as at that time, the country was losing about 100 to 120,000 barrels of crude per day.

“But the good thing now is that we’ve witnessed drastic reduction in the volume of crude oil theft that we were experiencing arising from the multi-faceted actions being taken by the general security services, the NNPC and the regulators. So, there has been concerted approach by government in trying to curtail the menace of crude oil theft in Nigeria,” he said.

He also said that the NUPRC is going beyond the Kinetic approach to crude oil theft as the commission has come up with a regulation termed the “Nigerian Upstream Petroleum Measurement Regulation” which will ensure that engineering integrity audits will be conducted on metering stations across 187 flow stations to ensure that all meters are delivering according to Industry and liable specification standards.

Explaining the provision in the PIA that made it obligatory for IOCs to sell crude to refiners, he said,  “Section 109 of the Petroleum Industry Act, which is one of the buildings of the PIA as a comprehensive legislative instrument to govern the oil and gas industry, section 109 of the act actually provides for enforcement of domestic crude oil obligation. And I want to say that the Nigerian Upstream Petroleum Regulatory Commission, as the technical and commercial regulator for the industry, actually proactively came out and brought together the producers and the refiners, including NNPC, and made it obligatory that they- that is, the producers- must ensure that they make crude available to the domestic refiners. So, what happens in this respect is that the NUPRC receives the volume of the domestic requirement form its sister agency, the Nigeria Mid and Downstream Petroleum Regulatory Agency, and factors this volume to the various liaises, that is, the various producers, and ensure that they make available this obligation to the domestic refiners.”