NNPC, NUPRC take different routes to oil loss mitigation

Sopuruchi Onwuka

The controversy surrounding industrial scale stealing of crude oil from the operations of players in the upstream petroleum industry in Nigeria is receiving separate responses from the industry regulator and national oil company that manage government’s commercial interest in the sector.

Going by separate presentations at the strategic International Conference of the Association of Energy Correspondents of Nigeria (NAEC), the Nigerian National Petroleum Company (NNPC) Limited will be chasing the thieves while the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will pay attention to the mode of stealing.

In his virtual presentation to the delegates at the conference which was hosted at Eko Hotel and Suites, Lagos, the Group Managing Director of NNPC Limited, Mallam Mele Kolo Kyari, lamented the monumental production losses attributable to thieving syndicates that thrive on illegal exports.

On other platforms, Mallam Kyari had calculated the volume of daily production losses at 400,000 barrels per day. He did not specify whether the stolen liquids are crude oil alone or a combination of crude oil and condensate.

The Oracle Today reports that the greater part of the stolen crude oil are lost from facilities of onshore and shallow water operations governed by joint venture agreements between the NNPC and multinational companies including Shell, ExxonMobil, Chevron, Total, Agip, Eni and Seplat.

All the major operating companies, except Seplat, are divesting their interests in the vulnerable JV operations; and Mallam Kyari declared in his presentation that government has resolved major commercial disagreements with the investors who are now focused on less vulnerable deepwater operations.

Mallam Kyari stated that whereas key agreements have been reached on migrating the existing production sharing contracts (PSCs) governing deepwater operations into the provisions of the PIA, major production losses remain serious concerns in the JV operations.

 “Our production is very low mostly because of the security challenges in the Niger Delta, and we are working collaboratively with stakeholders in addressing this. If we resolve the security issues, we will get back to 2.1 million barrels per day,” he said.

He declared that NNPC would mobilize and work with government’s security agencies and other stakeholders in curbing production theft in the Niger Delta, adding that efforts are on ground to bridge the gap between production capacity and physical output volumes.

But in his own speech at the event, the Commission Chief Executive (CCE) of the NUPRC, Mr Gbenga Komlafe, declared that the commission would implement a more scientific approach to policing production pipelines.

Mr Komolafe who listed prime targets of the PIA and the regulations that would drive activities to achieve them noted that crude oil stealing in the country still stands in the way to policy destination.

“Crude theft is still with us and it has become one of the major issues we are addressing as a commission and a government. We are planning seven additional regulations in line with provisions in the PIA to guarantee return on every dollar invested in Nigeria over any other jurisdictions,” he said.

He said community interests and development incentives which were main content of the several Memoranda of Understanding (MoU) and subsequent Global Memoranda of Understanding (GMoU) are now consolidated into a permanent legal arrangement for funding development projects in the host communities.

 He said Host Community Development Trust Fund has replaced the MoU and GMoU between oil companies and the host communities.

On curbing and possibly arresting massive theft in the industry, Mr Komolafe said that the NUPRC would collaborate with security agencies in tracking security challenges plaguing the petroleum industry. He added that key objective would be to generate reliable data on the mode and pattern of stealing in the industry.

He said NUPRC was collaborating with security agencies to install gadgets for “real time loss detection” in accordance with the provisions of the PIA.

On lease administration, Mr Komolafe stated that only qualified candidates with convincing readiness would be awarded oilfields and blocks in the country. He lamented that some of the awardees that were served licenses in the past have not been able to activate work programmes in the assets.

Although he did not declare the dormant companies and their latent assets, he pointed out that some 13 out of 30 marginal field assets awarded to companies are yet to see activity.

The PIA regime, according to him, would only allow capable companies with convincing readiness to participate in competitive bid round for oil assets. He also declared incentives for work programmes that would lead to realization of the country’s aspirations of reserves growth and production increase to 40 billion barrels and 4.0 million barrels per day respectively.

The Oracle Today reports that the different routes taken by the NNPC and NUPRC at tackling crude stealing indicate the regulator’s audience to public perception that the volumes of crude oil stealing in the country and the size of logistics involved couldn’t have been possible without insider collaboration.

Industry experts point out that whereas numerous artisanal refining operations that feed from illegal feedstocks dot the Niger Delta, ship loads of stolen crude oil that sail international waters in chattered tankers cannot be harnessed from broken lines located onshore and inside swampy creeks that meander the coastal marshlands.

They also fault the direction of the fingers of the NNPC has been pointing towards churches and mosques where few cans of mainly illegally refined products and distillates were found as completely misleading and misrepresenting the industrial scale lifting of stolen crude from the region.

Some field officials of oil companies told The Oracle Today that some of the vessels indicted so far in the incidental arrest of illegal export crews can only loaded at terminals or via ship-to-ship transfers.  

Some whistle blowers that pointed at covert export deals involving highly placed industry officials appear to have failed to attract adequate attention and response from the government, amplifying the complicity of political actors in the stealing.

It is expected that the real time wellhead and pipeline loss detection to be installed by the NUPRC would clearly indicate the expected differential between actual losses from pipes and trunklines and figures brandished from official quarters.