A rising phenomenon that has remained a source of concern to stakeholders in the oil and gas industry has been the surge in oil theft across the country.
On the average, Nigeria Extractive Industries Transparency Initiative (NEITI) indicated that in 2019 alone, Nigeria lost 42.25 million barrels of crude oil to theft. The product is valued at $2.77 billion.While the country is also struggling to keep the per barrel cost of oil low, the commission, which replaced the defunct Department of Petroleum Resources, insisted that technology is being deployed to keep the production cost in check. The economy has continued to bleed from the negative impact of crude oil theft in the country. A major concern for the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the body responsible for the regulation of the upstream petroleum industry.While the country is also struggling to keep the per barrel cost of oil low, the commission, which replaced the defunct Department of Petroleum Resources, insisted that technology is being deployed to keep the production cost in check.
NUPRC has the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the Oil and Gas Industry. The discharge of these responsibilities involves monitoring of operations at drilling sites, producing wells, production platforms and flowstations, crude oil export terminals, refineries, storage depots, pump stations, retail outlets, any other locations where petroleum is either stored or sold, and all pipelines carrying crude oil, natural gas and petroleum products, while carrying out the following functions, among othersBefore the Petroleum Industry Act, which established it, was signed by President Muhammed Buhari in 2021, there were several decrees that made changes to the operations in the petroleum industry. Before then, Petroleum matters were handled by the Hydrocarbon Section of the Ministry of Lagos Affairs, which reported directly to the Governor-General. The Unit kept records on matters relating to exploration, and importation of petroleum products. It also enforced safety and other regulations on matters which were then mostly products importation and distribution. As the activities of the petroleum industry expanded, the Unit was upgraded to a Petroleum Division within the Ministry of Mines and Power. Living up to its mandates therefore, the commission has not rested on its oars in tackling the negative impact of the surge in oil theft. In fact, recently, it set up a team of experts to carry out a thorough audit of the activities of operators in the sector in the upstream petroleum industry in the last two years.Part of the points of reference was for the committee to establish the actual operational capacities of operators; to find out if the volumes being touted are actual; and if so, what additional measures need to be put in place to effectively address the issue. Holding the bull by the horn, the Commission has called a stakeholders’ meeting to discuss the matter with a view to jointly address the situation.
The Commission has activated its technical and commercial mandate to demand for the statement of financial accounts of the operators and reservoir accounts of productive oil wells for the last two years.The move, according to the commission, was to ascertain the actual volume of crude oil stolen by vandals and saboteurs, against recent allegations by some industry operators regarding the volume of crude theft on a daily basis.Major stakeholders have lamented the unprecedented rate of oil theft recorded in recent times and its debilitating effect on government revenue and accretion to reserves. An incredible 80 per cent of oil pumped in the country, particularly in the east, were stolen. Findings also reveal that 95 per cent of oil production does not get to the terminal. Nigeria has not been able to meet its quota allocated by the Organisation of Petroleum Exporting Countries (OPEC), losing close to 400,000 barrels of oil per day to lack of capacity.Owing to these concerns in the past few days, a statement signed by the Chief Executive of the Commission, Mr. Gbenga Komolafe, disclosed the latest move to unravel the facts behind the theft, stating that the panel would carry out a forensic investigation to cover the technical and commercial operations of oil companies involved in drilling and selling of crude oil.According to reports, Komolafe stated that the commission was not unaware of the “tragedy of oil theft” which he noted has been a plague on the industry and had last year triggered an industry-wide initiative aimed at curbing it.
This, he said, was to help increase crude production levels; a development which he said followed an express presidential directive.The commission has stepped up efforts to deal with the issue of oil theft in collaboration with the military and other relevant agencies. Information has it that the Commission mandated the newly constituted panel to investigate the claims regarding the volume of theft from the various oil fields.A collaboration with other relevant agencies will help upgrade and deploy the latest technology towards curbing crude oil theft in Nigeria. NUPRC has made efforts to take technological advancements into consideration in its work processes. Also, a data driven approach remains a valuable process for estimating injector/producer connectivity between wells in a producing field. The Technological Adaptation Unit within the Engineering and Standards Department of the company engages service providers on new technologies that could be implemented in the Nigerian Petroleum Industry.Deploying data to tackle oil theft will definitely change the industry and the many implementations for the oil and gas industry in Nigeria. To this end, the commission has established more data-related initiatives, including the National Improved Oil Recovery Centre (NIORC) focused on utilising big data to drive reduction in cost per barrel.Arguably, we are in the era of big data in almost all aspects of human endeavour. In tandem, the oil and gas industry has significantly moved in the direction of acquisition of big data, to explore, capture, develop, produce hydrocarbons, and monitor reservoir performance and surveillance in real time.An initiative of the Commission, under Gbenga Komolafe’s headship is the use of the 4D seismic surveillance, nodal seismic technology where real-time seismic data is collected at periodic intervals to interpret for the reservoir effect as a result of injection-production in a reservoir will help reduce oil theft.
This process helps in reducing cycle time in decision-making on reservoir performance.This brilliant development would ensure higher operational efficiency, lower downtime, lower Health, Safety and Environment (HSE) risk and lower environmental impact with high capacity for continuous data gathering.
Olamide Adeniji is a member of the editorial team of TheScript Newspaper