• Oil & Gas - News
  • Updated: March 23, 2023

Oil Measurement Laws: What Federal Government's Enforcement Means

Oil Measurement Laws: What Federal Government's Enforcement

Nigeria loses billions in revenue by relying on international and indigenous oil companies to determine the amount of crude oil they produce. 

Since the country analyzes its crude oil before exporting, the same requirement should ordinarily be applied to the fuel it imports into the country. 

There's a bigger metering problem of even determining the quantity of PMS consumed in the country and the quantity imported (and subsidy paid).

Nigeria has been losing revenue due to loss in production, adding that a huge difference exists between the quantity of crude oil reported at production facilities compared with the quantity exported (and revenue derived from).

It is in view of the above facts that oil measurement laws have become necessary. 

The Federal Government on Wednesday commenced the enforcement of the Petroleum Measurement Regulations, as well as five other laws in the midstream and downstream oil sectors.

Disclosing this through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, during the official unveiling of the six laws by the Governing Board of the NMDPRA in Abuja on Wednesday, the government warned operators that it would go after anyone who breaks the new laws.

It said the six regulations were part of the 20 laws developed to guide the midstream and downstream oil sectors, adding that the remaining 14 regulations were being finalized at the Federal Ministry of Justice. 

The Governing Board Chairman, NMDPRA, Idaere Gogo-Ogan, said the authority would ensure that the laws were strictly complied with, to effectively grow the revenue generated from the oil industry.

The six laws include the Midstream and Downstream Petroleum Operations Regulations; Natural Gas Pipeline Tariffs Regulations; Gas Pricing and Domestic Demand Regulations; Assignment or Transfer of Licence and Permit Regulations; Petroleum Transportation and Shipment Regulations and Petroleum Measurement Regulations.

He warned operators to avoid breaking the laws, stressing that the NMDPRA would go after any defaulter, as it was in the best interest of stakeholders to understand the contents of the new laws.

“In as much as we want to provide an environment that encourages growth and development, you will agree with me that without enforcement and strict compliance, we will not be able to achieve anything.

“So, the authority would hammer on compliance and we expect stakeholders to really take advantage of these regulations and not break these laws, because if you do, we will come after you,” Gogo-Ogan stated.

The Chief Executive of NMDPRA, Farouk Ahmed, said the regulations had been designed to enable businesses through regulatory clarity, certainty, fairness, transparency, and best industry standards.

“In addition to the regulations being launched, 14 other regulations have been developed and shall be issued shortly,” he stated.

On the objectives of the regulations, the Legal Adviser and Secretary of NMDPRA, Joseph Folorunsho, said the midstream and downstream regulations provided procedures for the grant of licenses, permits, authorizations, and payment of fees, as well as provided sanctions and penalties for non-compliance.

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