Why Nigeria awarded N21 metering contract for oil production

• The Nigerian government is taking urgent steps to curb crude oil theft in the country
• The government disclosed that it had awarded a $21 million contract to meter Nigeria’s 187 flow stations
• The Minister of Petroleum Resources (Oil) Heineken Lokpobiri, said the metering will track oil production sales anywhere in the world

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

The Nigerian government has approved about $21 million for a metering project to promote effective monitoring of crude oil production and distribution in Nigeria.

The Minister of Petroleum Resources (Oil), Heineken Lokpobiri, disclosed this at a press briefing and said the development is part of the government’s effort to curtail theft affecting Nigeria’s oil and gas sector.

Nigeria moves to track crude oil production with the award of $21 million metering contract Credit: Bloomberg/Contributor
Source: Getty Images

New is to track crude oil sales

He explained that the contract is for the metering of 187 flow stations and will be carried out across the Niger Delta region.

Lokpobiri said:

“The contract costs about $21 million, and the oil and gas sector transactions are in dollars. That is the cost of the contract as approved by the Federal Executive Council, chaired by the President, Commander-in-Chief of the Armed Forces. These are steps that have never been taken before by any previous government. But this government decided to do so because of our commitment to transparency and accountability.

The minister said the move is part of the government’s step to ensure proper accountability, stating that it is a significant development that has not happened in Nigeria before,

According to reports, Lokpobiri said the project would be completed in six months.

Crude oil sales are a major revenue source

The minister also disclosed that there were not enough steps in the past to curb oil theft, adding that the development is also dedicated to tracking Nigeria’s crude oil export from the loading point to the final destination of sales anywhere in the world that Nigeria’s oil is sold.

According to the minister, revenues from the oil sector are a major source of Nigeria’s revenue. The contract will help to ramp up oil production and lead to a rise in the government’s revenue.

Nigeria’s crude oil production rises

An earlier report by Legit.ng disclosed that Data from the Organisation of Petroleum Exporting Countries (OPEC) disclosed that Nigeria’s average daily crude oil production increased slightly to 1.276 million barrels in June.

The information is according to data from direct communication with Nigerian authorities. This is an increase of just 25,000 barrels daily from the 1.251 barrels per day recorded the previous month.

Nigeria remains Africa’s largest oil producer

However, secondary sources put Nigeria’s daily crude oil production in June at 1.362 million barrels, dipping by 10,000 barrels from May’s record of 1.372 million barrels daily.

Despite the drop in production, Nigeria remained Africa’s largest oil-producing country, followed by Libya, which had 1.2 million barrels daily in June.

The development means that Nigeria has continued to fall short of its OPEC oil production quota of 1.5 million barrels daily and its target of 1.78 million per day, as contained in its 2024 budget.

Nigeria targets 2 million barrels daily

The continued failure to meet its daily quota is a challenge to the revenue target of President Bola Tinubu’s government.

According to reports, the Minister of Petroleum Resources (oil), Heineken Lokpobiri, said that Nigeria will target two million barrels daily starting in 2025.

Experts believe that insecurity issues and low investment pose challenges to the oil sector and the exit of international oil companies (IOCs).

NNPC seeks oil-backed loan

Reports say that the Nigeria National Petroleum Company Limited (NNPC) is seeking another $2 billion oil-backed loan, which analysts say will affect the country's revenue from oil.

The NNPC reportedly said the money would be used for business activities and exploration.

The Nigerian petroleum industry has faced challenges recently. A report says that the national oil company owes oil marketers about $6 billion in backlog payments, leading to some halting their participation in the industry.

IOCs, oil producers get FG's order to supply crude to Dangote

Legit.ng earlier reported that the Nigerian government, through the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), has agreed with oil producers to allow the sale of crude oil to local refineries at market prices.

The agreement will end a supply dispute between local refineries and oil producers, including international oil companies (IOCs).

The oil producers, under the aegis of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce Industry (LCCI) at the behest of the NUPRC, agreed to yield to a scheme that would mutually benefit both parties and focus on ensuring that local refineries are not starved and ripped-off.

Source: Legit.ng