Komolafe: Erroneous To Say IOCs Are Refusing To Sell Crude To Local Refineries, There Needs To Be A Willing Buyer-Willing Seller Relationship

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engineer Gbenga Komolafe, has said that it is “erroneous” for one to say that the International Oil Companies (IOCs) are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act (PIA) has a stipulation that calls for a willing buyer-willing seller relationship.

Komolafe said this in an interview with ARISE NEWS on Monday, where he also revealed that about 40% of what is believed to be oil theft in Nigeria could actually be attributed to metering inaccuracies, which the agency is working to fix in order to save the country billions of dollars.

The NUPRC boss, responding to the accusations by various local refineries, including Dangote Refinery, that IOCs are refusing to sell crude oil to local refineries, said, “The issue is not that the IOCs or other liaises, other producers are refusing to make crude available. So, to the best of the knowledge of the commission, there is nothing like IOC being too big or not complying with their statutory obligations to make crude available. I think that is erroneous and I need to make that very clear. So, the IOCs and other producer, none of them is refusing to comply with the provisions of the law of the Federal Republic of Nigeria, and the commission is in no way shying away from this, so that needs to be made very clear.”

Explaining the provision in the PIA that made it obligatory for IOCs to sell crude to refiners, he said,  “Section 109 of the Petroleum Industry Act, which is one of the buildings of the PIA as a comprehensive legislative instrument to govern the oil and gas industry, section 109 of the act actually provides for enforcement of domestic crude oil obligation. And I want to say that the Nigerian Upstream Petroleum Regulatory Commission, as the technical and commercial regulator for the industry, actually proactively came out and brought together the producers and the refiners, including NNPC, and made it obligatory that they- that is, the producers- must ensure that they make crude available to the domestic refiners. So, what happens in this respect is that the NUPRC receives the volume of the domestic requirement form its sister agency, the Nigeria Mid and Downstream Petroleum Regulatory Agency, and factors this volume to the various liaises, that is, the various producers, and ensure that they make available this obligation to the domestic refiners.”

However, Komolafe revealed, “I need to say that there is a provision of willing buyer- willing seller in the PIA. So, the regulator, that is the NUPRC, is guided strictly by that provision of the law. And after the initial engagement in which of course all the refineries in the country, including the representatives of the Dangote refinery were present at that meeting, the next thing that happened is that the commission recognised the fact that the parties were not playing according to the rules of the game. To say the least, crude oil supply follows international principles, crude being an international citizen. And the commission came out again, and as I speak, I’ve been able to proactively put in place what we call the rule of engagement between parties, and that is already in force and that will equally be assessed from the website of the NUPRC.”

Komolafe then addressed the negative impact of crude oil theft on the country, stating that apart from reducing the volume of oil available, this dastardly act also discouraged investors from stepping into Nigeria’s onshore sector.

He then highlighted the roles being undertaken by the NUPRC to curtail crude oil theft as he said, “The NUPRC, upon assumption of duty, that is the current leadership of the NUPRC under my team being the pioneer management, we indeed commissioned an independent study, and that study revealed that we were losing, as at the time we were losing about 100 to 120,000 barrels of crude per day. But the good thing now is that we’ve witnessed drastic reduction in the volume of crude oil theft that we were experiencing arising from the multi-faceted actions being taken by the general security services, the NNPC and the regulators. So, there has been concerted approach by government in trying to curtail the menace of crude oil theft in Nigeria.”

He also said that the NUPRC is going beyond the Kinetic approach to crude oil theft as the commission has come up with a regulation termed the “Nigerian Upstream Petroleum Measurement Regulation” which will ensure that engineering integrity audits will be conducted on metering stations across 187 flow stations to ensure that all meters are delivering according to Industry and liable specification standards.

“In the course of the independent integrity audit, it was revealed that about 40% of what is adjudged crude oil theft actually are attributable to what is called metering inaccuracies. And if this is fiscalised, we’ll realise that the nation will be saving billions of dollars annually.”

Ozioma Samuel-Ugwuezi

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