Oil & Gas
THE Department of Petroleum Resources, DPR, has directed Shell Petroleum Development Company, SPDC, to refund 2,081,678 barrels of crude oil alegedly fraudulently reallocated over a three-year period.
Realnews reports that the SPDC reallocated the crude oil from June 2016 to July 2018 through discrepacies in metering.
After discovering the discrepancy in metering in Shell operations, DPR, in a letter, Ref.: DMR/CTO/COA/COM/V.5/230, dated December14, 2020, demanded that SPDC should refund more than 2 million barrels of crude oil illegally reallocated between June 2016 and July 2018.
The letter was entitled: “Reallocation of Bonny Terminal gross Volume from June 2016 to July 2018 Based on Comparison of Metered Gross Between the Coriolis Meter and LACT Unit Installed on the NCTL.”
Realnews reports that Coriolis flow meter and the Lease Automatic Custody Transfer Unit are both measuring systems used to meter crude oil, but they have often been manipulated by some oil companies to shortchange the crude production ecosystem.
Realnews gathered that in a letter dated February 8, 2021, Shell agreed to comply with the DPR directive to refund the stolen crude.
The Shell letter signed by Steve Okwuosah, manager, Business Relations and JVC Excellence, was addressed to the director, DPR and referenced: SPDC-COM-2021-00951.
The letter stated: “We note your directives as contained in the above-referenced letter and wish to confirm that the Shell Petroleum Development Company of Nigeria Limited (SPDC) will implement the refund of the 2,081,678 barrels of crude oil from the Trans Niger Pipeline (TNP) injectors (SPDC, TEPNG, NDPR, and WSPOL) to the Nembe Creek Trunk Line (NCTL) injectors (Aiteo, Belemaoil, Eroton and Newcross) over the period from end of January 2021 till November 2021 in accordance with Schedile 111 as contained in the Department of Petroleum Resources (DPR) letter ref: DMR/CTO/COA/COM/V.5/230 dated 14th December 2020.”
It was learnt that both DPR and Shell had been on the matter for quite sometime with Shell recommending further dialogue and engagement.
This was said to have angered the management of DPR, which insisted on nothing but refund by Shell, prompting the initial terms of further engagement recommended by Shell to be rejected by DPR.
Responding to Shell letter of January 14, 2021, the DPR in it’s letter dated January 28, 2021, stated: “Please be informed that we are unable to accept your request for further engagement on the matter due to your failure to implement the refund of 2,081,678 barrels of oil from TNP injectors to NCTL injectors as directed by the Department.
“As you are aware, the refund volume is a function of production reallocation (for June 2016 to May 2017) in order to effect correction for the initial water allocation to NCTL injectors with Coriolis meter (by SPDC) which was rejected by DPR vide our letter Ref: DMR/CTO/COA/COM/V.3/102 and dated 9th February 2018, because it was contrary to statutory requirements
“Accordingly, you are directed to note the following:
- Ensure total compliance with the directives communicated to you via our letter, Ref: DMR/CTO/COA/COM/V.5/230 dated 14th December 2020.
- Your December 2020 Schedule 1B for Bonny Terminal Network and the resultant stock certificates issued to the affected companies are unacceptable. You are to therefore, with immediate effect, adjust the schedule 1B and re-issue the stock certificates to the relevant TNP and NCTL injectors, to reflect the production adjustments for the months.”
Crude oil theft either through deliberate false metering by some oil majors or illegal bunkering by cartels is rife in the Nigerian oil and gas sector with Nigeria ranking as the second country with highest rate of oil theft, only next to Mexico.
Real news that Nigeria lost $1.35 billion to oil theft in the first six months of 2019, according to the federal government.
President Muhammadu Buhari, apparently piqued by the development and in tandem with his anti-corruption crusade, had ordered a clean-up of the messy system with a clear instruction to the DPR to stop crude oil theft and bring the perpetrators to book.
The President’s stance was said to have been necessitated by the need to plug leakages and widen the nation’s revenue base to fund the budget.
This latest development is seen by industry watchers as a critical intervention and milestone mediation by DPR. – With reports from the EagleOnline
– Feb. 18, 2021 @11:59 GMT /
Tags: Crude oil fraud: DPR asks Shell to refund 2m barrels
