NNRC condemns Nigeria’s Reliance on IOCs for Crude Oil Production, Exports Data

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A view shows the oil port of Es Sider, Libya, March 16, 2017. Picture taken March 16, 2017. REUTERS/Esam Omran Al-Fetori

Chineme Okafor in Abuja

The Nigeria Natural Resource Charter (NNRC) has described as a “sad commentary,” Nigeria’s reliance on data from international oil companies (IOCs) to determine the volume of crude oil produced and exported, even after about 60 years of oil exploration and production by the country.

NNRC stated recently at a workshop in Lagos on the remedial issues raised in the various oil and gas audit reports of the Nigeria Extractive Industries Initiative (NEITI), that after several years of reportedly managing the country’s oil industry, Nigerian authorities still do not know the exact volume of crude oil exported every day and often relied on whatever the IOCs told them.

Chair of the Expert Advisory Panel (EAP) of the NNRC, Mr. Odein Ajumogobia, stated this in an opening remark that was delivered on his behalf by a former Vice President at the World Bank, Dr. Oby Ezekwesili.
Ajumogobia, a former minister of State for Petroleum, also disclosed that very little results could be gained from Nigeria’s attempts to reform her extractive industry, notably the oil and gas sector, if the country failed to comprehensively implement the remedial issues highlighted by the NEITI in its audit reports.

The remedial issues, according to Ajumogobia, bothered on oil theft, abuse of governance processes, loss of revenues, and poor management of the industry, all of which have resulted in huge economic losses to Nigeria.

“Despite our proven reserves of 37.1 billion barrels of crude oil and 180.1 trillion cubic feet of natural gas, Nigeria remains a net importer of refined petroleum products aimed at meeting the bulk of its local consumption needs. Undoubtedly, we are yet to fully optimise and maximise the opportunities in the oil and gas value chain. The need for our government to address some of the recurring issues in NEITI’s audit reports still requiring remedial actions is of utmost importance. Over the years, both government agencies and the Nigerian public do not know the exact volume of petroleum exported except what the IOC’s say. This is a sad commentary for a country that been exporting crude oil close to six decades,” Ajumogobia explained.

He added: “If recommendations such as the multi-phased, calibrated meters at the oil well-heads, flow stations and export terminals are adhered to, this challenge might have been avoided. The need to invest not only in metering infrastructure but also in digital command centres where regulating agencies can monitor the status of the oil assets in real time should therefore be encouraged.”
Ajumogobia explained that NEITI’s reports highlighted that up to $14.2 billion had been lost by Nigeria to theft of crude oil, in addition to another $1.5 billion between 2009 and 2013, and $4.1 billion in 2014 by six companies.

“The report also revealed losses associated with arrangements such as the ‘product for oil swap’, offshore processing agreements that cost the country about $518 million and $198.7 million in 2013 and 2014 respectively, outside the loss to the infamous Strategic Alliance Agreements (SAAs) in the upstream sector,” he said.

“The importance of remediation of the NEITI audit reports especially on ongoing efforts to reform and reposition Nigeria’s oil and gas industry cannot be overstated as it is intertwined with the need to project Nigeria not only as a country committed to improving the ease of doing business but also aligning with global best practices in the industry,” Ajumogobia explained.

“Enthroning transparency and accountability in the management of natural resource wealth has positive implications on cross cutting issues such as poverty reduction, peace and stability especially in the oil producing areas, economic growth, shared prosperity, environmental protection, good governance, democratic deepening and overall development of our country,” he stressed.

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