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Needless Squabble Over Control Of Operations At Nigeria’s Oil Export Terminals

by Akpandem James
2 years ago
in Opinion
oil
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asToo many cooks spoil the broth. This is an age-long adage which presupposes that if too many persons or entities are involved in a task or activity, it most likely would not turn out well; chances of compromise in quality and execution are high. This cannot be truer elsewhere than it is at Nigeria’s crude oil and gas export terminals where a coterie of agencies, in apparent disregard of extant laws, have been spoiling for attention and relevance; with dire implications for the country’s economy.

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Nigeria’s petroleum products terminals have become one veritable minefield where corporate fortune seekers and mercantile wayfarers have decided to stubbornly pitch their tents. The number of agencies involved in activities at the terminals is just mindboggling; and they operate with impunity, defying lawful directives forbidding them.

In a report submitted in October 2022, the Senate Ad Hoc Committee that investigated oil lifting, theft and the impact of petroleum production and oil revenues, expressed concern over the crowd; and the implications of their silo operations. It listed entities present at the terminals to include the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Midstream/Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian Customs Service (NCS), Nigerian Immigrations Service (NIS) NDLEA, Federal Ministry of Trade, Industry and Investment, Ministry of Transportation, INCHAPE, Port Health, TROBEL, Arlington Nigeria Limited, Inspectorate, SIFAX,  etc. The committee recommended that some should vacate, but the recommendation was treated as hot air.

The committee specifically noted the dual and conflicting regulatory presence of both the NUPRC and NMDPRA, which it considered unbecoming and outrightly against the spirit and letters of the Petroleum Industry Act (PIA), 2021. It did not only seriously frown at the development, it recommended that those that are not authorised by law to be there must be made to quit, even if backed by administrative directives. Such directives, it pointed out, would be in conflict with the prescriptions of the law.

The committee did not see any reason why, for instance, the NMDPRA should be at integrated oil terminals. It explained that whereas the PIA distinctively created two regulatory agencies for the oil and gas industry, the NUPRC has exclusive responsibility for the upstream sector while the NMDPRA has responsibility for the midstream and downstream sector. The NMDPRA was only conferred with the mandate to regulate “future stand-alone export terminals” and not existing integrated terminals. Its mandate is strictly in respect of refined products and not crude oil and gas export.

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The PIA had envisaged the involvement of the NMDPRA in some aspects of export activities, and made provisions for the future development of Stand-alone Export Terminals (SET) for the export of refined products for non-holders of Petroleum Mining Lease or Oil Mining Lease. There was no such provision under the Terminal Dues Act (TDA). The TDA prescribed the legal basis for establishing crude export terminals only for holders of Oil Mining Lease or Oil Prospecting License.

Even under the PIA, the regulatory oversight over all upstream operations and activities (including crude oil terminals whether integrated or otherwise), is clearly vested in the NUPRC. The dual regulatory oversight exercised by both the NUPRC and NMDPRA and the precipitate crisis among staff of the two regulatory entities therefore became a source of serious concern to oil and gas producers on the terminals who consistently complained of the negative impact the development has brought on ease of doing business at the terminals. They again voiced the concern recently at the opening of the Nigeria International Energy Summit (NIES) which held in Abuja between April 16 and 20, 2023.

During the Senate Committee investigation, another but related area of concern was raised: the country could not really place a finger on the volume of oil produced and the volume lost to theft, vandalism and sharp practices respectively. Production levels were falling and Nigeria was losing the opportunity of taking advantage of the favourable price regime occasioned by some recent unexpected global developments. Nigeria’s crude oil production which stood at 2.13 mbpd in January 2020 had fallen to as low as 1.38 mbpd by July 2022. By September of the same year, average crude oil production had gone down to 1,232,430 bpd with crude oil accounting for 985,633 bpd and condensate 246,597 bpd. This was almost one million barrels less than the country’s average technically allowable rate of oil and condensate production of 2,232,117 bpd.

Although the Senate committee did not specifically say it, there were indicators, and in fact insinuations, that the presence of a crowd of agencies at export terminals may have compromised measurements and deliveries, as conflicting figures were being brandished by the respective organisations as levels of stolen crude oil. It was a worrisome scenario and possibly the main reason why the upper legislative chamber decided to embark on the investigation, because of the consequential huge losses to federation account revenue and impact on the environment by the reported activities of vandals.

The bandied figures were overtly suspicious. The volumes were quite high. Given the industry terrain and complex logistics, it would be hard to believe that such volumes could be stolen from pipelines and transported to illegal sales points or makeshift refineries. The suspicion may also have prompted the regulatory inquest by the NUPRC. The Commission carried out a forensic examination of the exploitation and delivery chain between January 2020 and November 2022, to ascertain accuracy of the stolen volume of crude oil within the referenced period.

 

–James, a media practitioner and commentator on contemporary issues, lives in Abuja, Nigeria


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