The Nigerian National Petroleum Company Limited’s (NNPC Ltd) declaration of a state of emergency on crude oil production, daily production has increased from 1.25 million barrels per day (mbpd) in June to 1.61 million bpd as of July 23, 2024.
The increment in output is in spite of significant operational challenges, especially affecting terminals at Bonny, Brass, and Forcados, prompting the Commission to employ end-to-end production monitoring and a mass balance methodology to accurately account for losses and differentiate them from operational losses.
Barely a month after the state of emergency, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced the increase in daily crude oil production for the country.
The Chief Executive Officer of the Commission, Engr. Gbenga Komolafe, disclosed this at the House of Representatives’ Special Committee’s two-day public/investigative hearing on oil theft and losses in Abuja at the weekend.
The announcement has elicited positive reactions in the national economy’s oil sector, with the potential for increased revenue accretion into the federal government’s coffers.
Recalls that the Group Chief Executive Officer of NNPC Ltd., Mr. Mele Kyari had declared the state of emergency at the end of June or early July in a speech at the 2024 Nigeria Oil and Gas (NOG) Energy Week in Abuja.
Kyari stated that the goal of the move was to boost Nigeria’s crude oil production and reserves.
“We have decided to stop the debate. We have declared war on the challenges affecting our crude oil production. War means war. We have the right tools. We know what to fight.
“We know what we have to do at the level of assets. We have engaged our partners. And we will work together to improve the situation.”
He had explained that a detailed analysis of assets showed that Nigeria could conveniently produce two million barrels of crude oil per day without deploying new rigs, but the major impediment to achieving that remained the inability of players to act in a timely manner.
“War will help NNPC Ltd. and its partners to speedily clear all identified obstacles to effective and efficient production, such as delays in procurement processes, which have become a challenge in the industry,” he said.
An elated Komolafe, the CEO of NUPRC, said Nigeria remained Africa’s largest producer of crude oil, boasting proven reserves of 37.50 billion barrels and a production capacity of approximately 2.19 million barrels per day (mbpd).
“Nigeria is facing significant challenges, especially affecting terminals at Bonny, Brass, and Forcados. This has prompted the Commission to employ end-to-end production monitoring and a mass balance methodology to accurately account for losses and differentiate them from operational losses.
“The NUPRC has introduced several innovative measures to enhance transparency and accountability,” he said.
He listed other innovations towards accountability to include the Advanced Cargo Declaration (ACD) Regulation that ensures no crude oil is exported without proper accounting and that assigns a unique identification number (UIN) to each cargo; the Upstream Metering Regulation, which mandates reliable metering systems to account for all hydrocarbon production and exports; and real-time cargo tracking and digital documentation to improve visibility and efficiency in cargo operations.
He explained that with a mandate to oversee the exploration, development, production, and lifting operations of crude oil and natural gas, NUPRC regulates both the technical and commercial aspects of operations in the nation’s Upstream Petroleum Sector, ensuring optimal tax revenue generation, royalty collection, and cost benchmarking.
“Other areas of major focus for the Commission include ensuring business continuity and production sustainability at low costs, accurate measurement and timely payment of royalties, uninterrupted crude oil and natural gas supply to the domestic market, and maintaining safety, health, and environmental standards.
“The Petroleum Industry Act 2021 grants the Commission several statutory mandates in the areas of calibration and certification of metering systems and equipment, publication of reports and statistics on upstream operations, regulatory oversight and issuance of quality and quantity certificates for exports, and determination of fiscal prices for crude oil and condensate,” Komolafe explained.
Komolafe stated that the strategies of the Commission aimed to optimise production, enhance regulatory oversight, and ensure accurate measurement and accounting.
He further stated that the Commission had prioritized improving rig availability and reducing non-productive time by unlocking heavy crude oil reserves via industry workshops.
“These initiatives also support new Petroleum Prospecting License (PPL) awardees to achieve their first Oil, among other initiatives,” he said.
