Approximately 40 percent of crude oil losses in the Nigerian petroleum industry are due to measurement inaccuracies and not theft.
Gbenga Komolafe, the chief executive of the Nigerian Upstream Regulatory Commission (NUPRC), stated this at the Petroleum Club quarterly dinner held in Lagos.
Komolafe said the revelation followed a forensic audit conducted by the commission between January 2020 to November 2022 on crude theft numbers to ascertain with accuracy the stolen volume of crude oil within the reference period.
Delivering his address on “Nigerian upstream petroleum sector: value optimisation, energy transition and regulatory perspectives”, Komolafe said the commission was 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 deployment and maintenance of metering facilities across the oil and gas industry, for transparency in hydrocarbon accounting.
“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,” he said.
He said the NURPC’s 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 the country.
The chief executive added that the commission, in collaboration with the various arms of the security forces, NNPC Limited, and host communities, have been able to suppress the ugly trend of hydrocarbon value decimation.
“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,”
Komolafe said Nigeria currently flares about 10 percent of its gas, which the commission is also determined to eliminate through the on-going Gas Flare Commercialisation Programme (GFCP).
“Nigeria produces about 8BSCF/D of gas, out of which approximately 20 percent is delivered to the domestic market, approximately 40 percent is exported to international markets, 30 percent is utilised for producer’s internal consumption and the excess gas is flared,” he said.
Komolafe said In line with the NURPC’s objectives, as outline in Section 6 of the PIA it 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.
“In addition, 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,” he said.
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He also highlighted some initiatives to enhance gas production In line with the Federal Government’s declaration of the period 2021-2030 as the Decade of Gas.
He said that the commission was taking steps to expand and develop the nation’s huge gas resources through enhanced gas exploration, development and utilisation schemes which will ultimately lead to gas reserves’ growth, increased gas production, maturation of domestic and export gas market, as well as gas flare elimination.
“In the face of the global energy transition and the need for cleaner sources of energy, gas is being positioned as our immediate transition fuel to lower the Nation’s carbon emission footprint in line with our climate change commitment,” he said.
The chief executive said following the completion of the 2020 Marginal Field Bid Round 50 Petroleum Prospecting Licences (PPLs) were issued to deserving awardees with expectations that with the existing discoveries in the awarded fields, early Field Development Plan (FDP) would be pursued by the awardees leading to incremental oil and gas production.
The commission is expected to facilitate timely approvals for expedited re-entry and early production as an estimated incremental production from the awarded fields is approximately 58,000 bpd and 87mmscf/d.
“In the short/medium term, we expect an estimated incremental volume of 461,000bpd and 565mmscf/d from new wells and well re-entry. In the long term we expect an estimated incremental volume of 162,000bpd and 868mmscf/d from FDPs which have been approved and are at various stages of execution,” he said.