With the regulatory authorities in the petroleum industry attributing about 40 percent of the volumes of crude oil losses in the oil and gas industry to measurement inaccuracies, Vice President Yemi Osinbajo on Tuesday asked agencies in charge to be more accountable, considering the economic consequences, institutional and personal reputations at stake as a result of such losses.
At the third phase of consultations with industry stakeholders on regulation development on Monday as mandated by Section 216 of the Petroleum Industry Act (PIA) 2021, the Commission Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, said the exercise to update the regulations on the Upstream Petroleum Industry Measurement systems was crucial to create an enabling environment for growth and investments in the Upstream Oil & Gas industry in the country.
Speaking at a Stakeholders Conference on Oil Theft and Losses in Nigeria in Abuja on Tuesday, VP Osinbajo said the menace of crude oil theft has been so grievous that something urgent needs to be done to curb it.
Osinbajo expressed concern that crude oil theft and sabotage of oil and gas assets were a clear and present danger to the country’s economy and national security.
“Not only do they pose a serious threat to oil exploration, production and our energy economy, they also impact negatively on revenue accruals to the Federation and the business prospects of investors in the oil sector,” he said.
The Federal Government, he said, prioritized the development of the Niger Delta, as well as the protection of oil assets, adding that the theft of crude oil and the accompanying attacks on the country’s energy infrastructure, especially in the Niger Delta, have, since the inception of the present administration, been of utmost concern to the government.
Against the backdrop of huge production cuts and revenue losses, the Vice President also highlighted the work done by the National Economic Council to check the problem, including
setting up an Ad-hoc Committee to ascertain the magnitude of crude oil theft and losses in Nigeria and recommend appropriate remedial measures.
Despite the recommendations of the Ad-hoc Committee, which informed the enactment of the Petroleum Industry Act, 2021, currently being implemented, the VP, said acts of vandalism of oil and gas infrastructure, oil theft as well as low production yields are still being reported in damaging and unacceptable proportions.
He said President Buhari enacted the PIA 2021 to revitalize the oil and gas industry, by stipulating elaborate provisions to accommodate the needs of the Host Communities in the oil and gas-producing areas.
The aim of these provisions, he noted, was to assuage their sensibilities, give them a sense of belonging and foster unity of purpose with oil companies for the mutual benefit of all.
The VP who spoke on the theme: ‘Protecting Petroleum Industry Assets for Improved Economy’, said the present administration was confronting these acts of economic terrorism on multiple fronts and with a range of tools.
“We have invested significantly in scaling up our maritime security architecture. In June 2021, President Muhammadu Buhari flagged off the Integrated National Security and Waterways Protection Infrastructure Project otherwise known as the Deep Blue Project – a collaborative multiagency effort involving the armed forces, the police and the Department of State Services (DSS), the Nigerian Maritime Administration & Safety Agency (NIMASA), jointly led by the Ministry of Transport and the Ministry of Defence.
“The project provides air, naval and land assets for surveillance, policing, and search and rescue operations in our coastal waters and our exclusive economic zones,” he said.
The VP recalled how he was at the Navy Headquarters to commission the Falcon Eye, a maritime surveillance facility that networks sensors installed along the country’s coastlines, designed to provide actionable intelligence in real-time on maritime security threats and enable the swift and pre-emptive interdiction of criminals.
“Taken together, these two initiatives are huge investments in making our waters safe for energy commerce and inhospitable for the criminals that violate our vital economic interests,” VP Osinbajo said.
Aside from scaling up the country’s maritime security architecture, Osinbajo also highlighted the efforts of the administration through its New Vision for the Niger Delta initiative and recalled how the country’s oil installations were being sabotaged by militant groups within a year of the Buhari Administration in office.
He observed that given the importance of oil and gas for federation revenues and export earnings, “it was no surprise that the economy went into recession in 2016 for the first time in 20 years, with the economy contracting by -1.6 percent that year.
“It was clear to the government at the time that to speedily exit the recession, we needed to ensure that oil production went back to its over 2 million barrels-a-day levels.”
The VP further recalled that in 2017, on the directive of the President, he undertook “a tour of all oil producing states especially in the Niger Delta to engage with stakeholders and get a measure of the grievances that formed the backdrop to the sabotage of the oil installations.”
Following the Vice President’s tour of the region, the Buhari administration’s New Vision for the Niger Delta was developed in 2017, as a forthright partnership between the Federal Government, State Governments, Private Sector and Local Communities, through which the people of the region can maximally benefit from the wealth of their land.
“As a result of those engagements and based on the feedback we had received from the communities, we were able to draw up the New Vision for the Niger Delta which helped to calm the situation and stem the attacks on oil facilities. These efforts led to significant success.
A 2018 Nigeria Oil and Gas Industry Annual Report, the VP said, revealed that crude oil production at the time went back up to an estimated daily average production of 2.12million barrels per day, adding that this upward trend was upended later by the COVID-19 crisis.
Noting that one of the pivots of the New Vision initiative was the establishment of modular refineries to curb illegal artisanal refining in the region and create employment opportunities for the region’s youths.
He recalled that following the recommendation by an Ad-hoc Committee of the National Economic Council, the government was determined to create employment opportunities for the youths of the oil-producing communities and making petroleum products available in these communities will go a long way to reduce hardship and criminality in the region.
“One of the ideas we pursued under the New Vision for the Niger Delta was licensing modular refineries to discourage illegal artisanal refining. The refineries were designed to be privately owned but with a small percentage of shares owned by the host communities. It was hoped that this could draw in the illegal refiners and thus shut down one of the most potent sources of sabotage of oil assets especially the destruction of pipelines,” he said.
The VP assured that the Buhari administration remained committed to captain the ship of governance to the very last hour, noting that the administration was committed to leaving its best actions, thoughts and ideas for use of the next administration and the benefit of the nation.
