A Review of the Nigerian Energy Industry

NNPC blames great loss in oil revenue on non-passage of PIB

Abiye Membere, GED, E&P*Nigeria loses 60 million barrels of oil in 6 months

24 July 2013, Abuja – The Group Executive Director, E&P, of the Nigerian National Petroleum Corporation, NNPC, Mr Abiye Membere has described the delay in passage of the Petroleum Industry Bill, PIB, as responsible for the great loss of revenue to the country.
Membere who disclosed this in an interview with newsmen in Abonnema, Rivers State said that the PIB team was fully aware of the implications of the bill and would do everything possible to pass the bill into law this year.
Abiye disclosed that Nigeria has been struggling to produce between 2.0 and 2.1mbpd since the beginning of the year even though there is the capacity to produce 2.5mbpd.
“Which is better between releasing more funds to the oil communities or to continue to lose over 400,000bpd to activities of thieves that are beyond government control?” He queried.
He suggested that it would be better for the country to use certain proportion of the barrels of crude oil being lost as fund to support the Petroleum Host Communities.
He warned that it would make sense and enable Nigeria to earn more revenue if we can remove sentiments and politics.
“It will be better to deal with challenges of host communities differently because the team did not bring the issue of host communities fund from the moon.
“The fund is one of the promises made by late President Umaru Yar’Adua  in far away South Africa where the commitment was made”.
According to him, Minerals Act also supported the roles of host communities before a firm is allowed to do business. He noted: “So, it is not far away from what the PIB has proposed.
“This was also supported by Nigeria Extractive Industries Transparency Initiative, NEITI, the bottom line is the issue of whether to continue to suffer low production versus the revenue proposed in the 2013 budget or we do something to ensure that in the medium to long term, Nigeria will continue to have stability in oil production.
Membere said that there is nowhere in the world where a bill put together will satisfy everybody. According to him, what the government is looking at as priority is for the nation’s interest to be at the forefront.
“If we are able to do that, the bill will not stay long before it will be passed. It is in the best of the people. It is in the best interest of the country so that Nigeria will be able to achieve the energy sustainability we are talking about for this country.
“If the International Oil Companies, IOCs, can go to Zimbabwe without infrastructure, it shows that they are in the country to maximise profit whereas the PIB is to optimise profit so that the oil sector will be a win-win deal for both the government and operators in the private sector,  he added.
There are indications that Nigeria will  continue to lose significant proportion of crude oil production to theft over the opposition of Petroleum Host Communities Fund by leaders from the North and international oil companies (IOCs) operating in the nation’s upstream sector of the oil and gas industry.
The Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, had announced the continuous loss of over 400,000 barrels per day, bpd) through theft and vandalism of pipelines and production facilities.
The National Assembly had approved 2.48 million barrels per day, mbpd, with a price benchmark of $79 per barrel in the 2013 budget approval.
However, the average crude oil production figure of Nigeria for the first quarter of this year according to Organisation of Petroleum Exporting Countries, OPEC, posted on its website  and obtained from secondary sources was 1.988 mbpd, compared with 2.073mbpd for the first quarter of 2012  and 2.111mbpd for the first quarter of 2011 April, May and June 2013,.
The production output figures for Nigeria suffered further decline with an average of   1,951mbpd in April, 1,930mbpd in May and 1,861mbpd in June, 2013.
According to Platts Survey, dips in the production output of the OPEC came from Algeria, Angola and Nigeria, which resulted in the decline of the cartel’s production level by 120,000bpd at the end of June 2013.
The survey showed that 1.88mbpd estimate for Nigeria was the lowest since September 2009, when production was pegged at 1.85mbpd as a result of frequent sabotage of oil installations and pipelines.
 For instance, Bonny Light crude has been under force majeure since mid April, when Shell shut in 150,000bp of production to repair a major pipeline reported to be damaged by thieves, and while production of Total’s offshore Usan crude restarted in late June, almost a month after it was stopped for unspecified reasons, the grade remains under force majeure.
Industry experts noted that the production figure for crude oil would continue to suffer setback in Nigeria as a result of the increasing number of oil theft cases, slow process of prosecution of pipeline vandals, absence of appropriate sanction for alleged vandals and poor remuneration for vigilante guiding the oil installations.
 They suggested that vandalism of oil installations would be curbed if the National Assembly could sustain the inclusion of Petroleum Host Communities Fund in the PIB being processed for legislators’ approval.
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