• Thu. Mar 30th, 2023

    Crude oil theft: Upstream industry regulator to probe oil firms technical operations, others


    Sep 28, 2022

    By Bassey Udo 

    To redress the challenges of crude oil theft and boost the country’s crude oil production capacity, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plans to probe into the operational and commercial activities of exploration and production companies operating within the country. 

    The Commission Chief Executive Officer of the the upstream petroleum industry regulator, Gbenga Komolafe, who unfolded the plan on Tuesday in Abuja said the agency would leverage on its technical and regulatory powers to ascertain the level of compliance of the oil companies with the terms and conditions in their operational contracts, to determine the challenges impeding expected deliveries on their oil production capacities.

    Komolafe said the NUPRC was determined to take bold and revolutionary steps, using a non-kinetic approach deal with the menace of crude oil theft which has significantly impacted the country’s current crude oil production capacity. 

    Although the country’s crude oil average production benchmark was pegged at about 1.88 million barrels per day in the 2022 Federal budget, industry report shows the country was barely able to  realise about 51.3 percent, or about 923,400 barrels between January and August. 

    A significant volume of the crude oil production capacity lost has been attributed to the activities of vandals who sabotage the oil facilities and siphon crude oil.

    Komolafe said the menace of crude oil theft has seriously affected the country’s economy and posed a huge challenge to the funding of the national budgets. 

    Consequently, he said although NUPRC was not an operator or oil producer, it has a statutory responsibility as a regulator to probe into the situation and seek drastic solutions to the challenges as the current situation, to save the country’s economy from further degeneration. 

    “The Commission will do everything within its authority to challenge the narrative and halt further degeneration by ensuring transparency in hydrocarbon accounting,” he said. 

    One of the steps the Commission was considering, in line with its technical and regulatory powers, Komolafe said, has the was to probe into the operational and commercial activities of exploration and production companies operating within the country to ascertain the level of compliance with the terms and conditions in their operational contracts and the challenges impeding expected output deliveries.

    He said the Commission would particularly be interested in the mode of operation of the companies in relation to the approvals as per their operational licences, the level of conformity with the technical provisions and production terms,  their level of investments to enhance capacity utilization, and the challenges they are facing, especially those contributing to the current unacceptable situation.

    The NUPRC CEO announced that effective Wednesday September 28, the Commission would be engaging with all the exploration and production companies individually to appraise the current situation, with the aim of get to the root of the problem.

    The Commission, he said,  believes strongly that there might be more fundamental issues in the industry affecting expected output and deliveries beyond the much touted issue of crude oil theft.   

    He confirmed that already invitations have been extended to all the operators for the  engagement. 

    During the engagement process, he said the, companies would be expected to present their work programme performance, acreage status, divestment plans (if any), field development plan (FDP) implementation status, upstream investment in the last five years, exploration activities, including geophysical acquisition/processing/reprocessing, leads and prospects maturation plans, and exploratory wells drilled in the last five years.

    Also during the engagements, the companies would be required to present their reserve status, life index, current reserves replacement ratio (RRR) and reserves growth strategy (RGS), status of Joint Venture/Production Sharing Contract activities, including ongoing facility projects, number of drilled wells, re-entry applications and approvals granted in the past five years. 

    Other required information on their operations include shut-in oil wells, their potentials and reactivation plan(s) and expected incremental volumes, technical allowable/production performance and production optimization strategy, including production profile for the last ten years; status of oil production facilities, as well as unit technical cost of production on field basis.

    The Commission said it would also insist on knowing their gas development strategy, gas reserves commitment status and domestic gas delivery obligation performance; status of utilization activities (if any); crude oil evacuation route and exported volumes from January this year, status of statutory payments as well as the challenges they are facing in the course of their operations. 

    Komolafe said the move by the Commission would ensure transparency and accountability in the industry to guarantee effective operation and output delivery in the interest of the country’s economy and the benefit of the investors and industry operators.

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