NNPC Weekly: Company adopts new strategy to track crude oil thieves

The Nigerian National Petroleum Company Limited (NNPC Ltd.) made a giant step towards tackling the disturbing issue of crude oil theft and damage to its operational pipelines and facilities.

This giant stride marked the beginning of activities last week as the company introduced the “Crude Theft Monitoring Applications” to further prevent activities of oil theft and pipeline vandalism.

Malam Mele Kyari, the Group Chief Executive Officer (GCEO) of NNPC Ltd. disclosed this during the renewal of the Production Sharing Contracts (PSCs) between the NNPC and its partners in the Oil Mining Leases (OML) in Abuja.

Kyari said that the destructive actions of vandals’ on pipelines became a difficult thing to deal with, but that the company had been able to put up a robust framework to curtail the menace through concerted and consistent engagements of its stakeholders, partners, government regulatory bodies, security agencies, and host communities.

He said one of the two newly developed applications had options for reporting incidences, with prompt follow-up and responses and the other had options for crude sales documents validation.

Both applications can be accessed on a mobile phone through the portal with the address ‘www.stopcrudetheft.com’

“There are still ongoing activities of oil thieves and vandals on our pipelines and assets.

“I commend the Armed forces; in the last three months, they have done substantive work and had destroyed some illegal refineries.”

Kyari said that international refineries where the stolen crude could be taken to had the obligations to ensure they bought Nigerian crude from credible sources which could be validated.

He added that they would be held responsible as part of the culprits involved in the theft chain, if they refused to do that.

The NNPC boss explained that the platforms were created to provide opportunities to members of the communities and other Nigerians to report incidences of theft and be rewarded.

He said that every product that left the country would have a unique registration number by the NNPC and validated by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), while a platform would be created where end-users, particularly refiners and traders can validate the product.

“We cannot do this without international collaboration. They must ensure that they validate this because we have a unique number.”

The GCEO stated that NNPC Ltd. would put an end to the oil theft menace as it now had a coordinated process and a line of sight around all marine movements in the country.

Reacting to the development, the Managing Director of Shell Petroleum Development Company (SPDC), and chairman, Shell Companies in Nigeria, Osagie Okunbor said it was a welcome development.

Okunbor regretted that crude oil theft led to the shutdown of the trans Niger Delta Pipeline (TNP) and contributed to the country’s inability to meet OPEC production

Also within the same week, NNPC Ltd. and its Production Sharing Contract (PSC) Contractors announced  the execution of fully termed agreements for the renegotiated PSCs.

This came less than one month after the unveiling of NNPC Ltd. by President Muhammadu Buhari in Abuja.

During an event at the NNPC Towers to mark the landmark achievement, the parties renewed their agreements in five Oil Mining Leases (OMLs 128, 130,132, 133, and 138).

The development will not only unlock further investments in the upstream sector and boost investors’ confidence, but also unlock over 500 billion dollars in revenue for the country.

Group CEO, NNPC Ltd., Malam Mele Kyari, said renegotiations of the assets were in line with the provisions of sections 311 of the Petroleum Industry Act (PIA) with other improvements to the PSCs aimed at driving performance in the PSC operations.

Kyari said the negotiations were completed within the timeframe specified by PIA for all re-negotiated PSCs, noting that there was now a great deal of clarity between NNPC Ltd. and its partners in the deepwater space.

He commended the president for his leadership in providing the NNPC Ltd. and its contractors the opportunity to achieve the milestone through the PIA, thereby offering more opportunities for boosting the nation’s crude oil production and revenue base.

In his remarks, Country Chair, Shell Companies in Nigeria, Mr Osagie Okunbor described the execution of OML 133 PSC contract as a significant progress towards harnessing the deepwater resources of Nigeria.

Also speaking, the Chairman/Managing Director of ExxonMobil Companies in Nigeria, Mr Richard Laing noted that the renewal of the Usan and Erha leases validated his company’s commitment to maintain a significant deepwater presence in Nigeria, through Esso Exploration and Production Nigeria (Deepwater) Limited.

On his part, Chairman/Managing Director of Chevron Nigeria Limited (CNL), Mr Rick Kennedy, said Chevron remained committed to supporting the country to develop its energy resources safely and reliably and would always collaborate with its partners.

The recent negotiations would put to rest the protracted dispute between the NNPC Ltd. and the Contractor Parties in Oil Mining Leases (OMLs) 125, 128, 130, 132 and 133, as well as 138 PSCs.

The PSCs and their leases, except OML 130, would run for another 20 years term under pre-PIA laws, while OML 130 would be renewed under PIA terms.

It would be recalled that the PIA in Section 311(2) stipulates that new PSC agreements under new Heads of Terms would be signed between NNPC Ltd. as Concessionaire and her Contractor Parties within one year of signing the PIA into law, giving a deadline of Aug. 15.

This provision paved the way for the resolution of lingering disputes which created investment uncertainty and stifled new investments in the nation’s deep offshore assets.

To achieve this, NNPC Ltd. leveraged on the near end term of the PSCs and the parties’ interest to renew the PSCs as a negotiation currency in bringing the contractors to work towards trading the past for the future.

These renewed PSCs would provide several benefits such as improved long-term relationships with contractors, elimination of contractual ambiguities especially in relation to gas terms, enable early contract renewal among others.

The signing ceremony was witnessed by the Minister of State for Petroleum Resources, Chief Timipre Sylva who was represented by the Permanent Secretary in the Ministry.

Others at the event were board members of NNPC Ltd., led by the Chairman, Sen. Margerie Chuba-Okadigbo and Chief Executive of NUPRC, Mr Gbenga Komolafe.

Also at the event were Chief Executive of NMDPRA, Mr Farouk Ahmed, Executive Secretary, PTDF, Dr Bello Gusau and the Executive Chairman, Federal Inland Revenue Service (FIRS), Mr Muhammad NNam.