Minister of Power, Bart Nnaji
Organised Civil Society Organisations (CSOs) in Nigeria have expressed concern that the new Petroleum Industry Bill (PIB) currently before the National Assembly may not establish the use of precise and standardised hydrocarbon metering technology in the upstream petroleum sector.
According to the Civil Society Legislative Advocacy Centre (CISLAC) and Action-Aid Nigeria, the new bill was not specific on the need to standardise metering technologies used by oil exploration and production companies in the country. But it proposes a provision for the creation of a new body, the Upstream Petroleum Inspectorate, which will assume the metering functions in oil and gas that is now shared between the Ministries of Petroleum Resources and Commerce.
Referring to findings by the Nigerian Extractive Industries Transparency Initiative (NEITI) processes on various anomalies in the country’s hydrocarbon metering process, the CSOs at a recent workshop in Abuja on tax justice in Nigeria, explained that Nigeria’s real oil production remained unknown considering the poor metering systems, which had equally failed to account for losses incurred through oil theft and leakages.
The draft PIB, provides for that the Upstream Petroleum Inspectorate to be established shall be saddled with various objectives inter alia: promotion of efficient, safe, effective and sustainable infrastructural development of the upstream sector of the petroleum industry; healthy, safe and efficient conduct of all upstream petroleum operations; regulate all technical aspects of the upstream petroleum sector as well as commercial activities within the upstream petroleum sector as may be designated by the minister of petroleum resources.
Other objectives that are expected to be achieved by the inspectorate include: to determine and ensure the implementation and maintenance of technical standards and specifications applicable to the upstream petroleum sector; execute government policies for the upstream petroleum sector assigned to it by the minister; and facilitate an enabling environment for investments in the upstream petroleum sector.
But the CSOs argued that without appropriate measure and expertise, the new inspectorate that will emerge with the passage of the PIB may end up being irrelevant in the industry.
“Nigeria continues to rely mostly on companies periodic well tests and export receipts to estimate its gross liquids and hydrocarbon mass balance. Additionally, some NNPC monthly bulletins states that companies do not always agree on disclosing all their data like production at wellhead for those that have installed metering system.
The legislative and regulatory framework is not precise enough and has led to overlaps in the institutional structure causing conflicts; Nigerian authorities have not created a precise methodology to calculate the gross liquids and hydrocarbon mass balance and some key regulation like the measurement guidelines of the DPR remains confidential,” CISLAC explained in a literature on hydrocarbon metering.
In its recommendation, CISLAC called for the installation of precise hydrocarbon metering systems at wellheads, flow stations and export terminal stages; the passage of a people-oriented PIB that will grant the proposed inspectorate some independence from government as well as companies, reorganisation and reequipping of agencies saddled with the responsibility of measurement and inspection as well as the disclosure of regulation and legislation on hydrocarbon metering, including the measurement standard of the Department of Petroleum Resources (DPR) amongst others.