The Federal Government has announced that the Nigerian National Petroleum Company Limited (NNPC) lacks the necessary funds to rebuild its aging pipelines.
Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil), made this statement at the 2024 Energy and Labour Summit in Abuja, organised by the Petroleum and Natural Gas Senior Staff Association of Nigeria.
Lokpobiri highlighted the need for Nigeria to repair its corroded and expired pipelines, especially as the country seeks to increase oil production. He stressed that even if production exceeds 1.7 million barrels of crude oil, the challenge remains how to transport it to the terminal.
“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.
“The reason why pipeline vandalism is very easy to do is because the pipelines have all expired they completely corroded and so, anybody can just go and tap it and the thing is busted; but there are better technologies which are more expensive, there are better pipelines that other people are using in other countries, but they are not cheap, We also need to change our model.
“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 declared.
He therefore called for public-private partnerships to fix the old pipelines, saying, “That is why we have to go for the global model – PPP. We have to get the private sector to come in.
For the private sector to come into any country to invest, he said they must have confidence in such a country, stressing that this was lacking in the past 12 years when there was no foreign investment in the nation’s oil company.
“When this government, came we tried to rebuild the confidence and investors are coming,” Lokpobiri added.
The oil minister maintained that the smuggling of fuel from Nigeria to other neighbouring countries is because the NNPC imports and sells below the landing cost.
“Nigeria plays a very critical role in the energy security in Africa. That is why whatever PMS we import into Nigeria finds its way to the whole of West Africa. That is why smuggling cannot stop. If NNPC Imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop,’ saying the security agents at the borders are also involved.
“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. If you put all the customs men on the road, they are Nigerians, you and I know what the problem is, and that is why I’m saying that for Africa to attain energy security, Nigeria has to play a very strategic role,” he remarked.
On the supply of crude to Dangote and other local refineries, he expressed fear that this may suffer a setback except production is ramped up.
“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. You know we resolve at the Federal Executive Council to sell crude to local refineries – Dangote and the other refineries that are refining products for local consumption.
“But the bigger challenge is whether we have enough quantity to be able to supply them because of certain things that happened before we came. You will agree with me that when I became minister one year ago, we were doing barely about a million barrels, but today we’re doing 1.7mbpd approximately, inclusive of condensate,” Lokpobiri said.
He explained further, “Supporting local refining is the way to go. We can look for investors to explore and ring out this crude, so I will be able to meet both our domestic obligation and also export some to be able to raise more dollars and meet our obligations.
“We are committed to ensuring we support local refineries with all the feed-stock. If you must supply refineries in Nigeria and you don’t have the crude to supply, it remains something that is written beautifully in a law.”
Lokpobiri said the Federal Government would ensure there is healthy competition by being fair to both the small and the big refiners.