The Nigeria Extractive Industries Transparency Initiative (NEITI) has noted that Nigeria could reduce the volume of oil stolen from its shores by insisting on and installing adequate metering infrastructure at various oil production fields and flow stations, particularly in the oil-rich Niger Delta.
NEITI explained at a workshop on metering infrastructure in Nigeria’s Oil industry, that the Country was perhaps the only oil-producing jurisdiction, where International operators determine her daily oil production volume.
It added that after many years of oil production, the country cannot independently verify her oil production levels, but relies on international oil companies (IOCs) to do same.
Speaking at the workshop, the Executive Secretary of NEITI, Waziri Adio, who was represented by NEITI’s Director of Communications, Dr. Orji Ogbonanya Orji, stated that experts in the industry had said the country’s oil metering infrastructure was adequate, adding that the agency believed it was not, and decided to commission a study on the adequacy or otherwise of the infrastructure.
NEITI had previously disclosed in its audit reports of operations in Nigeria’s oil sector for 2012, 2013, 2014, and 2015 that a total of $9,896,794,799 ($9.89 billion) worth of crude oil was lost to inadequate measurement of oil produced as a result of poor metering infrastructure. It explained for the period, up to 106,861,842 million barrels of oil were not adequately accounted for.
But in his remarks, Adio said: “Stealing of Nigeria’s crude can be minimized if we know exactly what we produce, what we consume locally and export internationally, and these have occurred over the years in NEITI’s audit reports.
“At this time when government is looking for ways and means of funding budget deficit, the need for us to take adequate measures to realize full revenues that accrue from oil, gas, and mining is key, and one way to do that is to know the quantity of oil we produce. Industry operators try to convince us that we are in good standing, but at NEITI, we think we are not. We think we can do better; we think that infrastructure for the measurement of crude oil that we produce is not adequate and can be improved upon. We think that we are the only country that has not done well here.”
Adio noted that NEITI will “be comfortable when our country gets maximum benefits from the oil and gas we produce,” adding that “and we think a lot of gaps exist and one of it is that we do not know the quantity of oil that we produce”.
On the quantity of oil the country often declared as its production volumes were estimated and not based on metered volumes, he said: “We think so because we are dealing with international oil companies who are also here to make profit, and because we do not have indigenous companies who have gone as far as the international oil companies, we do not think we should rely more on information that we get from companies that are here to do business.
“We must have our independent way of assessing what we are producing like it exists in Saudi Arabia, Kuwait, Norway and others who do not have the kind of challenges we have.”
In his presentation on the outcome of the study, Dr. Sunday Kanshio, who was a member of the study team, stated that most of the oil production sites the team visited during its research were found to have no meters at their well-heads in breach of the dictate of the 1969 Petroleum Act of Nigeria.
Kanshio further disclosed that the team discovered that there was no infrastructure in place to accurately determine the volume of crude oil or product stolen or lost in the country.