Meters needed at oil wellheads for royalty payments – report

October 9th, 2019

By Obas Esiedesa

Nigeria needs to install meters at oil wellheads to enable it accurately calculate royalties’ payable for all onshore and shallow water oil production fields, a study commissioned by Nigeria Extractive Industries Transparency Initiative (NEITI) has reported.

NEITI has in its previous reports on the oil and gas sector held that Nigeria does not know the exact amount of crude oil produced in the country.

A member of the study team, Dr. Sunday Kanshio, who presented the report to journalists and civil society organisations in Abuja, disclosed that while there were meters at export terminals in the country, visits to oil production fields showed that there were no meters at wellheads.

Kanshio said this would not allow for accurate calculation and payment of royalties by oil companies.

He explained: “The study was conducted to understand where we are regarding to oil and gas measurement in Nigeria, because most of the things that people were saying about measurement infrastructure was that there are not meters.

“We actually went to the field to see for ourselves what is currently going on and the we found that at the export terminals there are meters”.

He pointed out that the Petroleum Act of 1969 stated that royalty payment is according to field production, “therefore is the need for measurement at the field level not just measurement at the export terminals”.

He added that oil companies should make royalty payment according to production in each oil field they operate.

Earlier, the Executive Secretary of NEITI, Mr. Waziri Adio said the agency was not satisfied with the current arrangement where production figures were coming from the operating companies with the country unable to independently verify such figures.

Adio who was represented by the Director, Communication and Advocay, Dr. Orji Ogbonnaya Orji pointed out that having an accurate measurement of production volume would reduce the quantity crude stolen from Nigeria.

He added that installing the facility had become imperative as government was looking for ways and means to fund budget in the country.

“There is the need for us to take appropriate measures to realize full revenue that are accrued from the production of crude oil and one way to that is to know the quantity of oil that we produce.

“Industry experts are trying to convince us that we are on good standing with what we have right now but we think that we are not, we think that the infrastructure measurement for the crude oil that we produce are not adequate and that it can be improved upon”, he said.

He continued: “Stealing of Nigeria’s crude can be minimised if we know exactly what we produce, what we consume locally and export internationally, and these have occurred over the years in NEITI’s audit reports.

“NEITI will be comfortable when our country gets maximum benefits from the oil and gas we produce and we think a lot of gaps exist and one of it is that we do not know the quantity of oil that we produce.” he added.

On his part, Dr. Michael Uzoigwe of the Facility for Oil Sector Reform (FOSTER) said the study would enable stakeholders have the critical knowledge on the status of metering in the country.

He said the report of the study would empower advocacy actors to be able to engage with key stakeholders operating the sector the issue

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