Between 2014 and last year, upstream petroleum industry capital expenditure (CAPEX) dipped to $6 billion from $27 billion.
Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, in an interview with The Nation, said there had been a 74 per cent decline in CAPEX.
The commission, he said, realised the negative impact of underinvestment in national oil production from the analysis of the McKinsey report. He said: “NUPRC will dig deeper into why within a space of eight years we have lost about 74 per cent of investments.” He expressed concerned that “attention has not been paid to the fact that investments in the industry dropped from $27 billion in 2014 to $6 billion in 2022.
“That is about is about 74 per cent drop. That kind of drop in the sector is significant”. Advising the incoming administration, he noted that besides NUPRC’s regulatory and supervisory roles, it also offers investments advice to the Federal Government.
Komolafe said the commission would conduct an inquiring into why Nigeria lost such a huge amount of investment while its counterparts in the Organisation of Petroleum Exporting Countries (OPEC), Gabon, Angola, Ghana and Ivory Coast were recording positive investments.
He said the NUPRC would be engaging the government with the findings, noting that tackling the cause would effect a positive change for Nigeria. He urged the incoming administration to change the narrative with the outcome of the investigation that the commission will engage its consultant – McKinsey and operators in the industry will churn out.
His words: “Part of what we set out to do is we are going to conduct inquest.
“We are going to engage the operators and consultants like McKinsey to dig into how within eight years as a nation we have lost about 74 per cent of investment in a manner unacceptable compared to other African region like Angola, Gabon, Ivory Coast and Ghana; not to talk of other OPEC nations.
“Why have we lost such staggering investments while other nations are recording free flow of investments.
“That is very critical. So, this is a critical issue that the commission will focus to address because we will really need to do root cause analysis to know how we suddenly got there.
“And we will be engaging the government with our findings, believing that addressing those root cause anylysis will be able to change the narrative for the better.”
Asked how safe the Nigerian crude oil is, the CEO noted that the industry has recorded significant improvements as a result of the stakeholders’ partnership for curbing crude oil theft.
He recalled that as at the last quarter of last year, the country was only producing 1.1million barrels per day (mb/d), stressing that crude oil and condensate production has now increased to 1.6mb/d.
“For me that is the best measure of how safe the Nigerian crude oil is,” he said.
Describing Nigeria as more of a gas rather than an oil nation, Komolafe dropped the hint that the country’s gas reserve is now 208 trillion cubic feet of gas.
He said since the nation has adopted gas as its transition fuel, NUPRC is focusing on optimising the gas potential to improve the federation revenue.
“There is no doubt that the impact of the energy transition is kicking in,” he added.In a matter of weeks, the Federal Government will enact regulations to stop the International Oil Companies (IOCs) -operators – from providing metering devices for the crude they produce.
Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Chief Executive Officer, Engr. Gbenga Komolafe who broke the news in an exclusive interview with The Nation in Abuja at the weekend.
He vowed to stop the operators from being the judges in their own case. Bemoaning the anomaly, he insisted it is against the letter and spirit of transparency for the operators to remain owners of metering devices in the industry.
His words: “That is not transparent. So that is the trust and philosophy behind the measurement regulation and we have been able to explain to the operators that it is not in the interest of transparency that that should happen.
“So we are all going to work the measurement regulation which will become effective in the weeks ahead. “
According to him, the regulator and by extension the country, has always been at the mercy of the oil producing firm, accepting whatever they present as their output figure.
Recalled that he had a few days ago said 40% of crude oil losses in the country was due to inaccurate metering devices.
Komolafe went memory lane to note the operators have been the ones providing the metering devices for measuring their outputs from inception of oil production in 1958 till date.
Responding to the question of who owns the inaccurate metering devices, the commission’s boss said “Very good question I will say. Yes, incidentally since oil was discovered in Nigeria in 1956 and the production commenced from 1958, it has been the operators that have been providing the metering devices.
“It has been the operators. So what merely happens, what our past experience as an oil producing nation has been that we accept the figures from the operators device the way they display it to us.
“So that is what we accept. So the government represented by the operator, and don’t forget that the asset belongs to the Nigerian states and their licensees and leasees as it were.
“So the regulatory position now that we have impacted upon is aimed at revising this trend in a manner that these operators and licensees will no longer be a judge in their own case.
” It is fundamental principle of Justice that they cannot continue to be a judge in their own case.”
He said in order to curb leakages of the crude oil, the commission is now focusing on strengthening hydrocarbon accounting in the country.
Komolafe added that “While we are putting all our efforts in ensuring increasing production, increased production cannot translate to optimal revenue where you have leakages.
” So you have to mitigate or curb leakages, sustain increased production for you to have optimised hydrocarbon revenue to the government’s federation account.”
He revealed that in the process of entrenching accountable and transparent production, the commission set up an expert committee of both consultants and the commission to establish forensically the volume of crude oil losses for just over a period of two years: 2020 to 2022.
This, he said, was to ascertain the actual figure of crude oil losses in the country because there were conflicting figures on the leakages.
He lamented that the NUPRC was mostly worried because the figures were by implication losses of revenue accruable to the nation.
The CEO noted that eventually, it was discovered that 39.9% roughly 40% of the adjudged losses was attributable to Measurement Inaccuracies (MI).
He described the 40% as staggering volume of oil and revenue loss. Continuing, he said “And as we speak, we have put in place a draft of measurement regulation that is in the process of being gazetted that has past through the regulation making process as prescribed in the Petroleum Industry Act.
“So by that the time we begin to implement the measurement regulation seamlessly, the net effect is that we will be able to reduce that number (40% MI) to what we call industry allowable errors in the best practice.
“Obviously it is not the best practice that you are losing 40% attributable to Measurement Error.” So we are very committed to that and that again we see as part of our achievements.”
source: https://thenationonlineng.net/