40% of Crude Oil Theft Due to Metering Error, NUPRC CEO Gbenga Akomolafe Reveals

Key Point

• Nigeria faces a major challenge with crude oil theft, impacting national revenue and investment.
• Approximately 40% of the crude oil theft is due to metering errors, according to an independent study commissioned by the NUPRC.
• The NUPRC has initiated an engineering integrity audit of 187 flow stations to address metering inaccuracies and ensure compliance with industry standards.
• The Nigerian Upstream Petroleum Measurement Regulation aims to enhance metering accuracy and integrity, potentially saving the nation billions of dollars annually.

 

Gbenga Akomolafe, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has revealed that about 40 per cent of crude oil theft in Nigeria is due to metering errors rather than actual theft.

Crude Oil Theft: A Major Challenge

Addressing the issue on Arise TV’s The Morning Show on Monday, monitored by Arbiterz, Akomolafe confirmed that crude oil theft is a significant challenge for Nigeria, impacting both the nation’s revenue and investment prospects.

The NUPRC chief said, “The issue of crude oil theft is affecting us not only in terms of the volume that we lose as a country but also that it’s serving as a disincentive to investors.”

To combat this, the NUPRC commissioned an independent study, which revealed that Nigeria was losing between 100,000 and 120,000 barrels of crude oil per day.

However, Akomolafe noted that there has been a drastic reduction in the volume of crude oil theft due to concerted efforts by various government bodies, including the NUPRC and the Nigerian National Petroleum Corporation (NNPC).

Metering Errors: A Significant Contributor

One of the most striking revelations from the study was that 40 per cent of the crude oil theft could be attributed to metering errors.

Akomolafe explained, “We put the Nigerian Upstream Petroleum Measurement Regulation in place, and with the approval of the Federal Executive Council, we flagged off the implementation of the phase one of this regulation by ensuring that all the meters we have in place are checked for integrity compliance.”

The NUPRC has initiated an engineering integrity audit of all metering stations, encompassing 187 flow stations, Akomolafe said. This audit is part of the broader Nigerian Upstream Petroleum Measurement Regulation, which mandates that metering services be conducted in a manner prescribed by the regulator to ensure accuracy and compliance with industry standards.

He highlighted the significance of this initiative, stating, “With this exercise, if we address the metering inaccuracies, we realise that the nation will be saving billions of dollars annually.”

This initiative is expected to mitigate the losses attributed to metering errors, thereby enhancing the accuracy of reported crude oil volumes and safeguarding national revenue.

Ensuring Transparency in the Bidding Process

When questioned about the transparency of the bidding process for the contracts related to the metering audit, Akomolafe assured that the Petroleum Industry Act (PIA) mandates a fair, competitive, and transparent process.

He stressed that the NUPRC is empowered to access the metering facilities of both international oil companies (IOCs) and independent producers to ensure compliance with the new regulations.

Domestic Crude Oil Allocation to Local Refiners

On the issue of domestic crude oil allocation to local refiners, Akomolafe addressed concerns raised about the availability of crude oil for refineries like the Dangote Refinery.

He explained that the NUPRC proactively brought together producers and refiners, including the NNPC, to ensure that crude oil is made available to domestic refiners.

He further noted that the commission follows the principle of willing buyer, willing seller, guided by the fiscal oil price set by the NUPRC in line with international best practices.

Avoiding Pitfalls in Pricing Mechanisms

In conclusion, Akomolafe underscored the importance of avoiding pitfalls in pricing mechanisms that could lead to under-recovery and subsidy phenomena, which have historically plagued Nigeria’s downstream sector.

By ensuring accurate metering and transparent allocation processes, the NUPRC aims to bolster the integrity and efficiency of Nigeria’s upstream petroleum sector, ultimately benefiting the nation’s economy and investment climate.

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