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Friday, March 24, 2023

Okowa And The Imperatives Of Effective Crude Oil Metering, By Jerome-Mario Utomi

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Except for peripheral reason(s), it will not in any way be characterized as an overstatement to describe Senator (Dr) Ifeanyi Okowa as a national leader, patriot and courageous straight talker who tells the truth to the power when he is convinced that leaders are going wrong.

Separate from his unrelenting decision to ban open grazing in Delta state despite resistance from some quarters,   coupled with his recent declaration that the nation Nigeria needs not amendment but a brand new constitution, the latest prove to the above assertion about his doggedness is predicated on his reportedly fresh call during a two-day retreat of the Investment Committee of Revenue Mobilization, Allocation and Fiscal Commission (RMAFC), in Asaba, for proper monitoring of Nigeria’s crude oil production to ascertain the volume and ensure transparency and accountability in the oil and gas sector.

 According to the reports, Okowa while speaking at the retreat which had as theme: “Repositioning Federation Investment for Enhanced Revenue Performance” organized to enhance the RMAFC’s revenue generation and monitoring strategy for improved public spending, explained that to ensure effective monitoring of crude oil production and export, there was a need to deploy the latest technology such as Artificial Intelligence/Robotics to guarantee effectiveness and management of cost.
He called for the reduction in delays arising from granting of agency permits that often led to the high cost of drilling and concluded that there was the need to urgently address the security challenges besetting the country such as crude theft, kidnapping, piracy and bunkering.  

Very instructive, this current call aside  renewing our consciousness that this nagging challenge called poor metering still spreads its wings on the nation’s petroleum sector, there are of course real reasons/ approaches that render the latest call by the Governor as all important.

First and very fundamental, is the Governor’s observation that many oil and gas agreements reached with International Oil Companies/Operators had not been closely monitored, resulting in low level of compliance. Secondly, by noting that   most of the agreements were formulated and signed a long time ago and did not reflect present economic realities, the Governor spoke about what has been in the minds of Nigerians.

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To demonstrate this belief, while the insight from Okowa’s comment remains credible, and should be encouraged to concentrate on preaching; honesty in governance, it more than anything else supports an earlier opinion held by this author’s earlier piece entitled; Buhari, Sylvia And The Petroleum Ministry.

The said piece x-rayed the operational templates of the Petroleum Ministry (the Up, Mid and the downstream players of the Petroleum industry) and categorized the critical issues confronting the industry into four.

One is the existence of multiple but obsolete regulatory frameworks which characterize the oil and gas exploration and production in Nigeria. This is followed by the Federal Government failing/failure to get the nations’ refineries back to full refining capacity. Three, the Petroleum Ministry’s inability to get committed to making International Oil Companies (IOC’s) adhere strictly to the international best practices as it relates to their operational environment. Fourth and final, is non-existence of clear responsibility/work details and action plans for agencies and parastatals functioning under the ministry. These failures, the piece concluded, have as a direct consequence; cast a long dark shadow on both the ministry and the sector.

Conversely, even as Nigerians celebrate Governor Okowa for using analytical method to advise his fellow public office holders, a role this author considers as dynamic and cohesive action expected of a leader of his class to earn a higher height of respect, the question that is more important than the piece itself is; will the Federal Government ever listen to this call?

This question/fear cannot be described as unfounded as this is not the first time the concern about poor crude oil metering is being raised in the country. 

Let’s look at some reports.

In May 2021, in an editorial by a Nigerian Newspaper, titled; Nigeria’s poor crude oil metering, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Dr. Orji Ogbonnaya Orji, was quoted as saying that nobody knew with certainty the exact crude oil produced in the country.  The NEITI boss revealed this when the Accountant-General of the Federation, Ahmed Idris, and the Director-General of the Federal Radio Corporation of Nigeria (FRCN), Mansur Liman, visited him in his office, in Abuja.

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The Director of the Department of Petroleum Resources (DPR), Sarki Auwalu, has swiftly denied the claim, saying that the agency has developed an App that monitors accurate volume of crude oil produced in the country. Orji, however, maintained that the agency is still in the dark over the exact volume of crude oil produced in the country. According to him, if Nigeria does not know how much it is producing, it will be difficult to know how much the country is expected to earn in revenue.            

Before the dust raised by Ogbonnaya revelation could settle, the Nigeria Extractive Industries Transparency Initiative (NEITI), in July 2021, again declared that Nigeria lost $2.77bn to crude oil theft in 2019. The News Agency of Nigeria (NAN) reports that the report on Oil and Gas was presented to the Media and Civil Society Organizations by Mr George Abiye, Assistant Director, Oil and Gas, NEITI. 

Among other observations, the report noted that Nigeria lost 42.25 million barrels of crude oil valued at 2.77 billion dollars to oil theft in 2019, the Nigeria Extractive Industries Transparency Initiative (NEITI) said in its latest audit report. The report showed Nigeria earned 34.22 billion dollars from the oil and gas sector in 2019, a 4.88 per cent increase over the 32.63 billion dollars released in 2018. The 2019 report covered 98 entities, including 88 oil and gas companies, nine government agencies and the Nigerian Liquefied Natural Gas (NLNG) Company.

It said the country could have earned more revenue if not for crude oil losses due to metering error, theft and sabotage in the year under review. The report, however, noted that the loss was 11.03 (21 per cent) lower than that recorded in 2018, which was 53.28 million barrels. According to the report, the losses were incurred by companies that conveyed crude volumes through pipelines that were easily compromised by saboteurs.

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Also, in another newspaper report dated May 14,2017 and titled; How Nigeria ‘lost N2 trillion to poor metering of oil wells’ in two years, it among other concerns stated that Nigeria may have lost about $64 million ( about N2 trillion) between the second quarter of 2015 and the first quarter of 2017 to poor metering of  its oil wells.

As this debate rages, two major concerns in my views stand out.

It remains a sad commentary that the oil sector is opaque and riddled with corruption due largely to ineffective supervision and lack of accountability in its operations. A challenge analysts believe ‘effective metering would not have only prevented crude oil theft in the country but equally serve as a means of measuring the true volume of our production as well as generate revenue for government as the oil companies were expected by the Weight and Measures Act 2004 to devote about 0.00025 per cent value of production to the project’.

Second is the call on the government to plug the inherent leakages in the sector without further delay by borrowing a leaf from other oil-producing countries such as Saudi Arabia, Kuwait, United Arab Emirate (UAE), Russia, USA, Brazil, Iran, Iraq and others that have effectively managed their oil productions. Adequate management of the oil sector will boost economic growth and development of the country.

 Utomi is the Programme Coordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA), Lagos. He could be reached via;jeromeutomi@yahoo.com/08032725374

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