Dr. Jekyll's Blog: NIMASA On Oil Platforms

An Offshore Oil Production Platform

The Guardian reported on February 15, 2012, that President Jonathan has now given his nod for representatives of the National Maritime Administration and Safety Agency to be stationed on oil platforms. This mandates the agency to “monitor the exportation of crude oil from the country and importation of refined petroleum products. The move, according to sources from the Presidency, would ensure improved monitoring of crude oil export business and importation of refined products for more accurate subsidy records.”

Ordinarily, one would be happy that the government is taking steps towards securing our assets and ensuring transparency from its upstream International Oil Company (IOC) partners.

However, this latest move begs the following questions:

Is this new role covered in the legal mandate of NIMASA from the act setting it up?
What then are the functions of the DPR, Customs, and NNPC? By the way these agencies are already stationed on our oil platforms, floating production storage and offloading (FPSO) vessels, and crude oil export terminals!
Will NIMASA be stationed on production “platforms” and oil and gas export terminals to police these other agencies mentioned above?
Why should a maritime safety and security agency be interested in economic issues associated with offshore oil production facilities?
How do you monitor petroleum products imports and subsidy records from oil production installations?
Since fraudulent crude oil accounting and export is potentially an economic crime, will the EFCC or the Police also be stationed on our platforms?

For the avoidance of doubt, below are the functions of NIMASA, as spelt out by the August 2006 Acts setting it up:

a. Pursue the development of shipping and regulate matters relating to merchant shipping and seafarers;

b. Administering the registration and licensing of ships;

c. Regulate and administer the certification of seafarers;

d. Establish maritime training and safety standards;

e. Regulate the safety of shipping as regards the construction of ships and navigation;

f. Provide search and rescue services;

g. Provide directions and ensure compliance with vessel security measures;

h. Carry out air and coastal surveillances;

i. Control and prevent maritime pollution

j. Provide direction on qualification, certification, employment and welfare of maritime labour;

k. Develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure;

l. Enforce and administer the provisions of the Cabotage Act 2003;

m. Perform port and flag state duties;

n. Receive and remove wrecks;

o. Provide National Maritime Search and Rescue Services;

p. Provide Maritime Security; and

q. Establish the procedure for the implementation of conventions of the International Maritime Organisation and the International Maritime Labour Organisation and other international conventions to which the Federal Republic of Nigeria is a party on Maritime Safety and Security, Maritime Labour, Commercial Shipping and for the implementation codes, resolutions and circulars arising there from.

Surely, none of these talks about crude oil exports monitoring and accounting.

What about the DPR?

Below are the DPR’s functions:

Supervising all petroleum industry operations being carried out under licenses and leases in the country in order to ensure compliance with the applicable laws and regulations in line with good oil producing practices.
Enfocing safety and environmental regulations and ensuring that those operations conform to national and international industry practices and standards.
Keeping and updating records on petroluem industry operations, particularly on matters relating to petroleum reserves, production and exports of crude oil, gas and condensate, licenses and leases as well as rendering regular reports on them to Government.
Advising Government and relevant Agencies on technical matters and policies which may have impact on the administration and control of petroleum.
Processing all applications for licenses so as to ensure compliance with laid-down guidelines before making recommendations to the Honourable Minister of Petroleum Resources.
Ensuring timely and adequate payments of all rents and royalties as at when due.
Monitors Government Indigenization policy to ensure that local content philosophy is achievable.

These functions cover all activities in petroleum operations; upstream and downstream, as well as petrochemicals.

Clearly the DPR is more suited to this function and they already have their permanent representatives along with NNPC and Customs on our export facilities (including FPSOs).

Now let’s define some of the terminologies in the hierarchy and life cycle of crude oil and gas production and export:

Rig – This is a mobile platform or ship, operating on land, swamp or at sea, equipped to drill wells for the exploration of crude oil and gas.

Production platform – A fixed offshore structure built and equipped for the purpose of producing crude oil, and gas and transferring same by export lines to oil terminals for processing and export. No export is done at production platforms.

Oil terminals – These are facilities on land that receive produced oil from offshore platforms, process, store and export quality crude oil through offshore mooring facilities.

Floating Production Storage and Offloading (FPSO) vessel – This is a big ship, usually without an engine, which is equipped to produce crude oil from subsea wells, process and store same and export through buoys (mooring facilities) stationed at sea.

From the above, what would NIMASA or any agency interested in monitoring crude oil exports be doing on platforms, as suggested by the presidential order?

In closing, I make the following points:

NIMASA has no legal backing to monitor crude oil exports, anywhere, based on the Act that set it up
The function of monitoring crude oil export and its accounting is already covered by NNPC, DPR and the Customs, and they are represented at export terminals and FPSOs
A government that prides itself in reducing the number of regulatory agencies at the Ports cannot be needlessly creating same problem at our oil production facilities
And lastly, crude oil exports are not monitored on production platforms