The Federal Government has announced that the Nigerian National Petroleum Company Limited (NNPC) does not have the necessary funds to repair the aging pipelines crucial for oil transportation in Nigeria. During the recent Energy and Labour Summit 2024, the Minister of State for Petroleum Resources, Heineken Lokpobiri, highlighted the urgent need for pipeline repairs amid challenges in oil production and distribution.
Lokpobiri addressed the issue of pipeline maintenance while discussing the divestment of international oil companies and the need for increased oil production. He emphasized that Nigeria’s pipelines, which have been in use since the 1960s and 1970s, are old, corroded, and no longer functional. He noted that even though the country has the capacity to produce over 1.7 million barrels of crude oil daily, the real challenge lies in effectively evacuating this oil through outdated pipelines.
“Our pipelines, which were once reliable, are now beyond their lifespan. This leads to significant difficulties in transporting crude oil to terminals,” Lokpobiri stated. He pointed out that the deterioration of these pipelines makes them easy targets for vandalism. Criminals can easily tap into corroded pipelines, leading to oil spills and loss of resources. He acknowledged that while there are more advanced and costly technologies available for pipeline construction, Nigeria has yet to adopt them.
The Minister questioned whether the NNPC, as a joint venture partner, has the financial capacity to undertake the pipeline replacement. “I believe NNPC needs to clarify whether it can afford these repairs, but from what I see, I don’t think they can,” he asserted. As a solution, Lokpobiri called for public-private partnerships (PPPs) to address the problem of aging pipelines. He stressed the importance of attracting private sector investment to revitalize Nigeria’s oil infrastructure.
For the private sector to invest in Nigeria, Lokpobiri noted that there must be confidence in the country’s stability and governance. He acknowledged that the lack of foreign investment in Nigeria’s oil sector over the past 12 years has hampered progress. “Since this government came into power, we have made efforts to restore confidence among investors, and we are starting to see positive changes,” he added.
In addition to pipeline issues, Lokpobiri discussed the persistent problem of fuel smuggling across Nigeria’s borders. He explained that the NNPC imports fuel at prices below the landing cost, which inadvertently encourages smuggling. “Nigeria plays a critical role in energy security across Africa. As a result, any petrol imported into Nigeria often ends up being smuggled to neighboring countries,” he stated.
The Minister expressed concerns about the involvement of security personnel in fuel smuggling operations. “Even if we deploy all our police and customs officials to monitor the roads, they are Nigerians and face the same challenges. For Africa to achieve energy security, Nigeria must play a vital role,” Lokpobiri remarked.
Turning to the supply of crude oil to local refineries, including Dangote Refinery, Lokpobiri warned that without a significant increase in production, these refineries may struggle to meet their needs. “Our goal is to ramp up production significantly. Only then can we ensure success in both the midstream and downstream sectors,” he explained. He mentioned that the Federal Executive Council has resolved to sell crude oil to local refineries to support domestic consumption.
However, he acknowledged the challenges that have arisen from previous production issues. “When I took office as minister a year ago, our production was barely around one million barrels per day. Today, we are producing approximately 1.7 million barrels, including condensate,” Lokpobiri stated.
Supporting local refining, he insisted, is essential for Nigeria’s energy future. “We need to seek investors who can help us extract and utilize our crude resources effectively, allowing us to meet local demands while also generating revenue through exports,” he added. He reiterated the government’s commitment to providing local refineries with the necessary feedstock.
Lokpobiri assured that the Federal Government is dedicated to fostering fair competition within the oil sector. “We will ensure that both small and large refiners are treated fairly, which will promote a healthy market environment,” he said.
The need for urgent action to repair Nigeria’s old pipelines cannot be overstated, as it is fundamental to the country’s ability to enhance oil production and ensure energy security for its citizens and the region. The government’s focus on public-private partnerships and investor confidence will be crucial in addressing these infrastructure challenges and reviving the nation’s oil sector.