NNPC Can Not Fix Old Pipelines – FG

The Minister of State for Petroleum Resources, Heineken Lokpobiri, has asserted that the Nigerian National Petroleum Company (NNPC) Limited lacks the necessary funds to rehabilitate ageing pipelines.

Naija News reports that the Minister stated this during the recent Energy and Labour Summit 2024, organized by the Petroleum and Natural Gas Senior Staff Association of Nigeria in Abuja.

In his remarks regarding the divestment of international oil companies and the imperative to increase production, Lokpobiri highlighted the urgent need for Nigeria to address the condition of its pipelines, which he described as outdated, corroded, and in need of replacement.

He pointed out that while the country has the capacity to produce over 1.7 million barrels of crude oil, the challenge lies in effectively transporting it to the terminal.

He said: “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 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.”

The Minister said for the private sector to invest in any country, they must possess confidence in that nation.

He emphasized that this confidence has been notably absent over the past 12 years, during which foreign investment in the country’s oil company was nonexistent.

“When this government came, we tried to rebuild the confidence, and investors are coming,” Lokpobiri added.

The oil minister maintained that fuel smuggling from Nigeria to other neighbouring countries is because the NNPC imports and sells below the landing cost.

“Nigeria plays a very critical role in Africa’s energy security. 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 crude supply 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 emphasized that promoting local refining is essential. We should seek investors to develop and extract this crude, enabling us to fulfil our domestic requirements while also exporting some to generate additional revenue and meet our financial commitments.

He underscored the organization’s dedication to providing local refineries with all necessary feedstock. If one intends to supply refineries in Nigeria but lacks the crude to do so, it remains merely a well-articulated provision in legislation.

Lokpobiri stated that the Federal Government is committed to fostering healthy competition by ensuring equitable treatment for both small and large refiners.