Terminals pave way as Nigeria loses $43b to oil theft
•DPR clarifies crude accounting process
Nigeria’s persistent crude oil loss has been linked to land terminals, as the Department of Petroleum Resources (DPR), said oil theft across offshore terminals are nearly impossible.
Between 2009 and 2018, Nigeria lost about $43 billion to crude theft as well as domestic and refined petroleum products, the Nigeria Extractive Industries Transparency Initiative (NEITI), had said.
The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, put crude oil losses for 2019 alone at about $750 million.
If such leaks were to be saved, the $43 billion would have been enough to finance the 2021 national budget of $35 billion (N13.082 trillion) without borrowing and provide additional $8 billion capable of constructing nearly 2,733km of the standard-gauge rail line that can link Lagos to Kano without resorting to borrowing from countries like China.
While clarifying the process used for accounting of crude production in Nigeria, Director of DPR, Sarki Auwalu, disclosed that most incidents relating to oil theft occur from the land terminals.
A statement issued by Head, Public Affairs, DPR, following a meeting with the House of Representatives Ad-hoc Committee on Oil Theft, in Abuja, said the process used in arriving at the level of oil production and lifting in the country.
Being the industry regulator, DPR’s responsibility included monitoring of crude oil production and lifting. Nigeria has over 30 terminals, five of which are on land.
Auwalu said most of the thefts come from land terminals because the land producers have to use pipelines to transport the crude into the terminals for export.
“In the process, you have a lot of third party interference, which results in volumes that are being taken and are stolen.
“And the theft volume, if not all, comes from the land terminals. But the offshore terminals, it is actually practically impossible to steal crude from offshore terminals, since it is from the bottom of the sea,” he was quoted.
Auwalu said determining the volume of production and lifting starts from the well and the well cannot be drilled without knowing the capacity of production.
“So, the hydrocarbon accounting in DPR starts from the well. Once you drill a well, you will need to have what we call a maximum efficiency rate (MER), to know the capacity that well will produce. The volume accounting starts from that point,” he said.
According to him, the methodology used in hydrocarbon accounting is static measurement and dynamic measurement.
Auwalu said: “The static is the volume that went into the tank that you can dip and know the volume while the dynamic is the volume that goes across the meter.
“We have two kinds of meters: we have a production meter that you measure the volume of oil produced, and we have a custody transfer meter where you measure the volume of oil that exchanged hands.
“What we do is to take inventory of all wells produced in every field based on the volume we give, within which that well cannot produce more than that.”
“If you under-produce, you can kill the reservoir; and if you over-produce, you can kill the reservoir. All these volume measurements, whether static or dynamic, we make a record of them.”
The Committee Chair, Peter Akpatason, decried the effect of crude oil theft, stating that it was the responsibility of all patriotic Nigerians to put an end to the menace.