Nigeria launches upstream probe to tackle production problems | Tellwell Newspaper
Tellwell Newspaper, Abuja – Nigeria:
By Ed Reed
Nigeria’s upstream regulator is launching an investigation into the country’s production woes, saying there is more than just oil theft to blame.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will begin holding talks with exploration and production companies individually today, it said.
It aims to determine what the problems are with the current setup. The regulator said it believed “there might be more fundamental issues in the industry affecting expected output and deliveries beyond the much touted issue of crude theft”.
In particular, the investigation will consider how companies are complying with their contracts.
NUPRC will ask operators about their work plans, including investments and exploration over the last five years. Companies are expected to share reserve information and growth strategies, drilling work and re-entries and potential for reactivation. It will also seek data on production profiles over the last 10 years, in addition to the status of production facilities and technical costs.
Questions will also be asked on gas development strategies. The NUPRC will ask about gas reserves and domestic deliveries.
The regulator said it intended to “ensure transparency and accountability in the industry to guarantee effective operation and output delivery in the interest of the country’s economy and the benefit of the investors and industry operators”.
NUPRC said it had a statutory responsibility to investigate the situation. It also has the power to seek “drastic solutions” in order to “save the country’s economy from further degeneration”.
NUPRC did not comment on how quickly it might conclude the investigation and when it might take action.
The country has launched similar initiatives in the past, with little apparent success.
Nigeria’s oil production has dropped over the year. According to OPEC, Nigeria slipped behind Libya and Angola in August, with output of 1.1 million barrels per day. Nigeria reported its own production even lower, at 972,000 bpd.
While output is struggling, fuel prices are rising – and Nigerian National Petroleum Corp. (NNPC) is on the hook for this. Local newspapers reported NNPC’s spending on fuel reached $1.22 billion in August.
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