The Department of Petroleum Resources has demonstrated an act of patriotism by compelling Shell Petroleum Development Company to refund 2,081,678 barrels of crude oil said to have been fraudulently reallocated from June 2016 to July 2018 via discrepancy in metering.
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.
It was gathered that 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.
The DPR, having discovered crude oil metering discrepancies in Shell operations had in a letter, Ref.: DMR/CTO/COA/COM/V.5/230, dated December14, 2020 demanded that Shell refunds the over two million barrels of crude oil illegally reallocated between June 2016 and July, 2018.
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.
Shell confirmed the illegality and discrepancy in metering and in a letter dated February 8, 2021 agreed to comply with the DPR directive to refund the stolen crude.
The Shell letter, addressed to the Director, DPR and referenced: SPDC-COM-2021-00951 reads in part: “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.”
The Shell letter was signed by Steve Okwuosah, Business Relations and JVC Excellence Manager.
This was said to have angered the management of DPR, which, driven by patriotism, had insisted on nothing but refund by Shell, prompting the initial terms of further engagement recommended by Shell to be rejected by DPR.
In a DPR letter dated January 28, 2021, a response to Shell letter of January 14, the DPR 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.
