Nigeria Loses $5bn Yearly on Non-metering of Oil Wells

The Delta State Commissioner for Oil and Gas, Mr. Omamofe Pirah has stated that non-metering of oil wells during loading and offloading of vessels cost Nigeria $5 billion yearly in revenue.

Speaking at the 2014 special management workshop organised in Lagos by the Nigerian Association of Petroleum Explorationists (NAPE), Pirah noted that Nigeria is one of the few countries where there are no measures to ensure fairness, legality, accuracy and quality control of all trade transactions in all sectors of the economy.

He noted that this ugly practice in Nigeria’s oil and gas industry is not in line with international best practices.

“Consequently, more than $5billion, representing about 10 per cent of the total annual revenue from the export of oil and gas from Nigeria, is lost to non-metering of oil wells and inaccurate ship-to-shore differences, while loading/offloading vessels,” he said.

Pirah said the inadequacy of information on the quality of metering, well test data, samples and other input data, including basic geologic models was a major challenge in the oil and gas industry.

According to him, providing adequate and accurate data in oil and gas accounting by the professionals involved will go a long way in imparting positively on investors’ confidence.

He noted that insufficient control over corrections could occur, adding that an important function of hydrocarbon accounting (HCA) system is to allow for correction to measurement data.

Pirah however, pointed out that this must also be accompanied by high degree of control, without which inconsistency is inevitable and very difficult to resolve.

The commissioner, who spoke on “Challenges and Prospects of Effective Oil and Gas Production Accounting and Metering in the Nigerian Oil and Gas Industry,” listed the challenges to effective hydrocarbon accounting to include information/data quality; inadequate reporting/accuracy of data; absence of best practices; commercial consideration; vandalism of production facilities and compliance to allocation and production rules.

Pirah further stated that there is a challenge of lack of acceptable best practice among hydrocarbon allocation professionals, stressing that there are many software vendors in the industry all trying to sell their products.

“This brings to the fore the non-recognition of the work or duties of hydrocarbon accounting professionals in the oil and gas industry. This arises from lack of standardisation and certification by any known or recognised institution,” he said.

According to him, it has been revealed that there are systematic loss of crude oil between well head, or flow stations and the metering terminals, poor metering infrastructure, poor coordination and weak revenue flow interface.

He stated that another major challenge in the oil and gas production accounting and metering is that there is no compliance to lay down rules of transparency, meter quality or physical conditions of crude during production or transfer.

The commissioner further stated that non-compliance will affect negatively, the expected results in hydrocarbon accounting.

Curled from This Day Newspaper

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