RECENTLY, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Dr. Orji Ogbonnaya Orji, disclosed 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.
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.
We believe that the problem has persisted for years unresolved because most of the oil companies involved in deep shore and offshore exploration are foreign firms. This is why indigenous oil firms should be given the opportunity in offshore drilling to enable them protect the interest of the country. The indigenous oil firms should, however, acquire the necessary expertise in order to do this effectively.
In 2019, NEITI raised the alarm that the country was losing over N123billion or $4.1billion annually due to poor crude oil production metering. It then argued that unless government took appropriate measures, limitations in the metering of crude oil production would continue to pose serious threat to the nation’s revenue target. During the period under review, government realised only 58 per cent of its projected revenue.
Nigeria, according to NEITI, is the only oil-producing country without adequate metering system to ascertain the accurate quantity of crude oil produced at any given time. Therefore, the installation of the metering facility has become imperative, particularly at this period of financial crisis. Adequate metering will also help reduce the recurring oil theft.
In its 2012-2015 reports, NEITI revealed that the country lost over $9.89billion worth of crude oil due to poor metering infrastructure. Within the period, over 107 million barrels of oil were not properly accounted for. The latest figures show that Nigeria loses over 250,000 barrels of crude oil per day to oil thieves. This translates to the loss of over $25 million daily in revenue.
NEITI’s alarm should serve as a wake-up call on the government to urgently install oil-tracking devices and save the country the huge amount lost on account of inadequate metering. It is unfortunate that after over six decades that oil was first discovered in commercial quantity in the country, Nigeria has not been able to independently verify its oil production levels, but relies so much on International Oil Companies (IOCs) to do so. Considering the huge revenue losses and the current volatility in the price of crude oil in the international market, and the shortfalls in projected revenues, the government should, without any delay, put the metering infrastructure in place.
In 2018, the Federal Government gave approval for an automated fuel system management and censor network aimed at tracking petroleum products movement across the country. Although the measure was to eliminate fuel subsidy scam, the government should reactivate it and also install metering facility at the nation’s oil fields to ensure transparency in the sector. Any plan to sanitise the oil sector should begin with tracking of every barrel of crude produced and exported out of the country and their destinations.
Lack of metering facility has resulted in discrepancies in remittances to the federation account, as well as frivolous subsidy payment claims by independent oil marketers. Often, the Nigerian National Petroleum Corporation (NNPC) has given daily petrol consumption figures different from that of private oil marketers. With adequate metering, it will be possible to ascertain the quantity of crude oil produced in the country.
Therefore, we call for adequate regulation of the oil sector so that Nigerians can actually know the quantity of crude oil produced. Let the government emulate other oil-producing countries, such as Saudi Arabia, Kuwait, United Arab Emirate (UAE), Russia, USA, Brazil and others that have effective metering system to determine their oil production levels. Having a transparent metering system is the best way to check corruption and incessant oil theft in the sector.