The Federal Government has acknowledged that the Nigerian National Petroleum Company Limited (NNPCL) lacks the necessary funds to rebuild the country’s aging and corroded pipelines. This was disclosed by the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, during the recently concluded Energy and Labour Summit 2024, organized by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja.
Lokpobiri highlighted the critical need to repair and replace Nigeria’s oil pipelines, many of which were built in the 1960s and 1970s and have exceeded their lifespan. He noted that the deteriorating condition of these pipelines has made them vulnerable to vandalism and has posed a significant challenge to the evacuation of crude oil, even when production levels are high.
“Part of our problem is that pipelines that were traditionally transporting our crude were built in the 1960s and the 1970s and the lifespan is since over. We have identified that even when we can produce, evacuation is a big problem,” Lokpobiri said. He added that the ease with which these pipelines can be tampered with is due to their advanced state of corrosion, making it simple for anyone to cause a rupture.
The Minister emphasized the need for more modern and secure pipeline technologies, similar to those used in other countries. However, he acknowledged that these technologies come with a hefty price tag that the NNPCL currently cannot afford.
“Now, the NNPC that is our joint venture partner, do they have the money to be able to replace these pipelines? I think NNPC will speak for themselves whether they have the money to be able to do that, and I don’t think they have,” Lokpobiri stated.
Given the financial constraints, Lokpobiri called for public-private partnerships (PPP) as a solution to fund the rebuilding of these essential infrastructures. He underscored the importance of restoring investor confidence, which he said had waned over the past 12 years, leading to a lack of foreign investment in Nigeria’s oil sector. However, he expressed optimism that efforts by the current administration are beginning to attract new investors.
Regarding the issue of fuel smuggling, Lokpobiri pointed out that the NNPCL’s practice of importing and selling petrol below the landing cost has made it difficult to curb the smuggling of fuel to neighboring countries. He further remarked that smuggling persists due to the complicity of some security personnel at the borders.
“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer,” he noted, highlighting the challenges in controlling the illegal trade.
Lokpobiri also raised concerns about the supply of crude to local refineries, including the Dangote Refinery, warning that this could be jeopardized unless Nigeria significantly ramps up its crude oil production. He reiterated the government’s commitment to supporting local refining, emphasizing the need for sufficient crude supply to meet both domestic and export obligations.
“Our ambition is to ramp up production. It is only when we ramp on production that the midstream and the downstream can also be successful,” Lokpobiri said. He assured that the government is committed to ensuring fair competition among both small and large refiners, as part of efforts to strengthen Nigeria’s energy security and economic stability.