EXCLUSIVE: NUPRC New Regulations That Will Guarantee Transparency In Oil Measurement Throws IOCs Into State Of Panic

…New Regulations Will Save Nigeria Billions Of Dollars Lost To IOCs Poor Measurements Of Crude Oil

The new regulations currently being worked on by the Nigerian Nigerian Upstream Petroleum Regulatory Commission (NUPRC) that would ensure transparent measurement of Nigeria’s hydrocarbons is causing panic among International Oil Companies operating in Nigeria, THE WHISTLER can authoritatively report.

The Commission, under the Petroleum Industry Act (PIA), had held stakeholders consultations on five new regulations essentially meant to ensure more transparency in the sector.

The move is in compliance with section 216 {1} of the Petroleum Industry Act 2021 on consultation with Stakeholders prior to finalising any Regulations,

The five new regulations are the Upstream Petroleum Measurement Regulations, Advance Cargo Declaration Regulations as well as Significant Discovery Regulations; Gas Flaring, Venting and Methane Emissions (Prevention of waste and Pollutions) Regulations as well as the Domestic Crude Oil Supply Obligation Regulation.

Over the years, poor crude oil metering has cost Nigeria huge losses running into billions of dollars.

The Federal Government’s reliance on the International Oil Companies (IOCs) to determine the quantity of oil it produces and exports is negatively affecting the country’s crude earnings.

According to the Nigerian Extractive Industry Transparency Initiative (NEITI) in its Independent Audit Reports on the oil and gas and extractive industries, Nigeria will continue to lose an estimated $1.4bn annually from oil theft and other malpractices in the sector if the metering issue is not properly addressed.

The oil and gas industry watchdog had said that unless government takes appropriate measures, limitations in the metering of crude oil production will continue to pose a serious threat to the nation’s revenue target.

Oil metering is one of the critical elements in the hydrocarbon value chain considering that it provides the production data upon which federally collected revenues such as royalty and Petroleum Profit Tax (PPT) are calculated.

Accurate metering of hydrocarbon streams has direct bearing on the revenue of both the operators and the government.

However, findings revealed that despite its importance, hydrocarbon metering has been a problem in Nigeria’s petroleum industry.

Investigations by THE WHISTLER showed that the amount of crude oil Nigeria loses through poor metering is always discovered at the offload points in other countries that receive the crude because those countries use technology, unlike Nigeria where it’s still being done manually.

It was revealed that the government has no multi-phased, calibrated meters at oil wellheads, flow stations and export terminals to determine the quantity of crude oil produced and exported by the International Oil Companies (IOCs).

What this means is that the machines that monitor loading into the vessels are owned, calibrated and operated by the IOCs without any form of supervision or participation by any government agency.

According to NEITI, Nigeria is the only oil-producing country without adequate metering to ascertain the accurate quantity of crude oil produced at any given time.

This has raised serious concern over issues of transparency and accountability in the oil industry regarding the quantity of crude oil production in Nigeria.

A top official with knowledge of the operations in the sector told THE WHISTLER that Nigeria lacks comprehensive and independently verifiable metering infrastructure. This has made the government to heavily rely only on the information provided by the IOCs for production figures

Worried by this development and in line with the provisions of the PIA, NUPRC came up with five new Regulations to stem the corrupt practices in the crude oil metering process.

Findings by THE WHISTLER revealed that the new Regulations would lay the necessary framework in standardisation of the processes involved in upgrading hydrocarbons measurements in alignment with international best practices.

It was further revealed that the move would also help operationalise the PIA, ensure accurate measurement of Nigeria’s oil and gas with proper calibration of Lease Automatic Custody Transfer machines, similar to what happens with power consumption meters.

Another source stated that the process of formulating the Regulations had been a rigorous and strenuous exercise, which is a product of critical thinking and evaluation by the Commission’s Regulation Development Team and the Presidential Implementation Committee on PIA.

This, it was gathered, will give the Commission the capacity and the capability to monitor upstream production from beginning to the end and ensure transparency in the loading process.

It was further revealed that the IOCs are not comfortable with the move by the Commission and have started taking steps to frustrate the Regulations.

A top official in government confided to THE WHISTLER that many of the IOCs deliberately under declare the quantity of crude oil lifted at the terminal because of the lack of supervision by the government during the process of crude oil lifting.

This is said to be costing government huge losses in revenues from Royalties and Tax Payment.

The source said, “We came up with regulations to ensure transparency in metering during the process of lifting of crude oil.

“The current situation is one that allows the IOCs to determine the quantity of oil it produces and exports and this is negatively affecting the country’s crude earnings.

“So with the new Regulations that is being worked on, that situation will be a thing of the past. But from what we are seeing, the IOCs are not comfortable with the Regulations and they are making every move to frustrate what we are doing. Their plan won’t work because we are determined to make sure we get things right in the oil and gas sector particularly in this area of metering of crude oil production.”

It was learnt that as soon as work is completed on the regulations, it would be gazetted for implementation by the Federal Government.