6 December 2012

Nigeria: Enforcing Compliance With Operational Rules in Oil, Gas Industry

The activities of most operators in Nigeria's oil and gas industry is worrisome, especially with regards to their flagrant disobedience of operational rules. Juliet Alohan takes a look at some of the issues and writes on the need for greater enforcement

Recently, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had to talk tough in a bid to ensure that the country avoids further environmental degradation and work related accidents in the oil and gas sector.

The minister, while delivering the keynote address at the 15th Health, Safety and Environment (HSE) Biennial Conference, held in Abuja recently, directed operating oil companies in the country to ensure strict adherence to HSE guidelines in the course of their operations.

Speaking at the conference with the theme; "Strategic Environmental Planning for Sustainable Development in the Nigerian Oil and Gas Industry", organised by the Department of Petroleum Resources, Alison-Madueke noted that "how far and well we advance will be dependent on the enshrinement of the appropriate culture and value systems of both the private sector and the policies of government."

While lashing out at at oil majors operating in the Niger Delta region, Alison-Maduake said they have not respected sustainable development in the conduct of their Exploration and Production (E&P) operations in the country.

Frowning at the attitude of operating companies in the region, she said, "Our industry has exploited oil from this region for over half a century. And it is clear that the industry has not always respected sustainable development in the conduct of its E&P operations."

On the seemingly lack of trust between the operating companies and the host communities, the minister said: "For the industry to regain the trust of the society, it must move from the 'trust me' world to 'show me' world.

"It must reach out for significant changes in its business management strategies such that it can be perceived as sincere and transparent, ready to engage the stakeholders and ready to identify with social responsibility in the society in which it operates."

She promised that the petroleum ministry will continue to promote the strategy of industry participation and collaboration, "to ensure that regulatory tools are employed optimally, and to ensure that operations are conducted in a manner that protects both the people and the environment."

Due to the peculiar challenges of Nigeria which requires special solutions, she said government has developed risk-based regulations for safe operations which require the operator to produce an operating plan to manage risks in certain types of operations.

She said government has also introduced the safety-case philosophy to ensure that risks in the oil and gas activities are identified, evaluated, and reduced, to as low as reasonably practicable while adding that government and the industry will continue to collaborate, to advance the cause of HSE and its associated programmes, "as we can ill-afford any more environmental disasters."

Listing areas which the industry operators must not fail to give priority, she said: "Consequently, going forward, my expectations of the industry is that it will provide the right technology and trained personnel, considerably reduce its environmental footprint, work constructively with government and society, support the social objectives of its host communities and demonstrate high ethical standards.

"The captains of industry here with us today, recognise that it is prudent policy to adopt these best practices in order to stay competitive and remain acceptable in the communities in which you operate. On our part, my ministry will continue to provide the necessary guardrails as it is my responsibility to enforce environmental regulations affecting the oil and gas industry."

According to her, "All these tools are geared towards achieving the optimum best practices in HSE and associated programmes. I urge the industry to reciprocate government's gesture, to not only set, but also continue to demonstrate high ethical standards," the minister said.

Also lamenting the attitude of oil companies in Nigeria, the Chief Executive Officer of Nigerco, Engr. Yabagi Sani, disclosed that the oil companies were uncooperative with government in efforts to put an end to oil theft and ascertain the true quantity of crude produced in Nigeria, disclosing that whereas there is the telementary technology for multi-phase well-head metering to determine the quantity of oil produced, the oil majors have refused to adopt it claiming it is too expensive.

The expert affirmed that at present, Nigeria's exact figure of crude production is unknown and only based on estimates as there are no internationally accepted standard of measurement, especially at the well-heads to determine the actual production figures.

According to Sani who is a consultant to the federal government on the revival of weights and measures systems, also known as legal metrology, in Nigeria, "multi-phase meters gives you how much water, gas or water that comes out of a well-head, the technology is there but they (oil majors) chose not to use it, they claim it is too expensive... Shell uses multi-phase meter in Gabon, why not in Nigeria?

"What they have at the well-head is temperature and pressure gauges and then they work with the estimated production figure of the well. But what actually comes out of the well, no one knows and what happens between the well and tank-farms, no one knows," he said.

He maintained that adoption of multi-phase meters at the well-head will help check the current outrageous level of oil theft, "because then, we will be able to tell what quantity of oil was produced at the wells and how much got to the tank-farms and at what point did we lose the difference. We will be able to determine if the difference was lost due to vandalised pipeline or wear and tear or through other means," he said.

He frowned at the stiff opposition the Weights and Measures department is facing from the oil and gas sector as operators refuse weights and measures staff from visiting their export terminals and facilities for inspection.

"They are not allowing the law to take its course," he said, and adding that sanctions provided in the weights and measures Act Cap W3 LFN 2004, may have to be applied on operators which could result to sealing their terminals for violating the law.

For the Nigerian oil and gas industry to compete favourably in the global energy market in line with international standards, government and the industry must continue to collaborate to advance the cause of HSE and its associated programmes with a view to avoid more environmental disasters.

Furthermore, relevant government agencies must rise to the task of enforcing operational rules and applying sanctions where necessary, to compel operators in the industry to play by the rules in order to block leakages and ensure that the country is not continuously short-changed, as the operators cannot dictate for the country.

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