Business & Economy - News - Oil & Gas - June 23, 2022

3m barrels daily output target: NUPRC moves to curb crude oil theft, sabotage

By Bassey Udo

To curb the menace of crude oil theft and shut-in of oil wells due to sabotage of production facilities, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Thursday moved to ensure the country’s target of three million barrels daily crude oil production was not derailed.

In inaugurating a Committee to carry out a study on reactivation of shut-in oil wells in the country, the NUPRC Chief Executive Officer, Gbenga Komolafe, lamented the impacts of crude oil theft and sabotage of oil facilities on the country’s overall crude oil output capacity.

Apart from the significant losses in crude oil production, especially in land and swamp terrains, the CEO said crude oil theft and other forms of economic sabotage have been the major consequences for the declaration of force majeure at the country’s oil export terminals.

Force Majeure is a declaration by the oil companies to inform their customers of their inability to meet the terms of their scheduled contracts due to disruptions in their operations as a result of unforeseen circumstances.

Komolafe said disruptions in crude oil export operations through the Bonny Oil & Gas Terminal (BOGT), and shut-in of wells from fields evacuating through the Nembe Creek Trunk Line (NCTL) and the Trans Niger Pipeline (TNP) resulted in the country’s inability to achieve its set output targets.

Apart from realising only about 60 percent level of compliance with its technical allowable rate
(TAR) of oil production, the NUPRC boss said the menaces were responsible for the country meeting only 72 percent of its assigned quota by the Organization of Petroleum Exporting Countries (OPEC).

Although the country possesses the capacity to produce an average of about 2.3 million and 2.5 million barrels per day, its recent output capacity was put at an average of 1.74 million barrels per day, excluding condensate production, which usually was not counted as part of the OPEC quota computation.

Also, the socio-economic impact of production and associated revenue losses to both government and investors, Komolafe noted, was a
deep cause for concern for all industry stakeholders in several ways.

Apart from constituting a threat to national and energy security, he said they result in the erosion of global competitiveness and ease of doing business, rise in
unemployment across the industry, and increase in conflicts due to proliferation of arms, and widespread health, safety and environmental challenges and community concerns.

He said the industry-wide technical integrated study would help in redressing these issues and pushing the government towards realising its production target of three million barrels of crude oil per day in the next three years.

As part of its strategies to reduce the menace to the barest minimum in the short run, and eventual elimination in the long run, the NUPRC CEO said the agency has developed regulatory technical, social, economic and security initiatives involving various industry stakeholders to tackle the problem.

“It is my utmost belief that the impact of these joint strategies would be felt across the industry in a few months,” he said.

The initiative to conduct an industry-wide integrated study on the reactivation of shut-in oil wells, he said, was conceptualised and approved as one of the ways to quickly gain incremental production for the country.

The Commission’s analysis of the problem, he said, revealed over 3,000 shut-in oil wells in-country, with huge potentials to boost oil production within the short term of six months), mid term (one year) and long term (over a year).

Consequently, he said the committee was mandated to collect and quality check data of all shut-in oil wells; evaluate the basis for shut-ins based on subsurface (geology and reservoir engineering) and surface considerations.

Also, the Committee is expected to develop an empirically driven criteria to identify candidate wells for production ramp up in the short, mid and long term, and identify and prioritise candidate reservoirs/fields with the potential to increase recovery factor in the short, mid and long term through Enhanced Oil Recovery (EOR) and Improved Oil Recovery (IOR) interventions as well as submit a robust report for implementation.

As part of its assignment, the Committee, which has one month to conclude the study and submit its report, would engage industry stakeholders to get
their buy-ins on the strategic initiative.

The Committee, which has Amadasu E. as Team Lead, with Georgeson V.U, Atiyegoba B.A, Dadi M.B, Mumuni O.T, Omion O.O, Namtari S.B, 8 Uzoigwe F.F, Mamman J.M, as members, while Shokoya Y.M is the Secretary.

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