The Federal Government said the Nigerian National Petroleum Company Limited does not have the necessary resources to rehabilitate the old pipelines.
Minister of State for Petroleum Resources (Petroleum), Heineken Lokpobiri, stated this at the just concluded Energy and Labour Summit 2024 organized by the Nigerian Association of Senior Petroleum and Natural Gas Officials in Abuja.
Lokpobiri, who spoke on divestment by international oil companies and the need to increase production, stressed that Nigeria also needs to rehabilitate its pipelines. He said the pipelines are old, corroded, and out of date.
He noted that even if the country could produce over 1.7 million barrels of crude oil, the question is how to evacuate it to terminals.
“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 explained.
He therefore called for a public-private partnership to rehabilitate 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 to the country to invest, there must be confidence in the country, he said. He stressed that this was lacking in the last 12 years when there was no foreign investment in the country’s oil companies.
“When this government, came we tried to rebuild the confidence and investors are coming,” Lokpobiri added.
The petroleum minister alleged that the smuggling of fuel from Nigeria to other neighboring countries was due to NNPC importing and selling below the landed 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.
He expressed concern that crude oil supplies to Dangote and other refineries could suffer a setback if production is not increased.
“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 added, “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.”
He said the Federal Government would ensure healthy competition by keeping it fair for both small and large refineries.
