Abuja, Nigeria – The Federal Government has revealed that the Nigerian National Petroleum Company Limited (NNPC) does not possess the necessary funds to reconstruct the nation’s aging oil pipelines. This announcement was made by the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, during the Energy and Labour Summit 2024, organized by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja.
Minister Lokpobiri emphasized the urgency of repairing Nigeria’s oil pipelines, many of which were constructed in the 1960s and 1970s and have long since exceeded their operational lifespan. He noted that even with the potential to produce over 1.7 million barrels of crude oil per day, Nigeria faces significant challenges in transporting this oil to export terminals due to the deteriorated state of the pipelines.
“Part of our problem is that the pipelines traditionally used for transporting our crude oil are old and corroded. The lifespan of these pipelines has long expired, making them highly susceptible to vandalism. The issue of evacuation remains a significant hurdle,” Lokpobiri stated.
He further pointed out that replacing these pipelines with modern, more secure alternatives would require substantial financial investment, which the NNPC currently lacks. “NNPC, our joint venture partner, does not have the necessary funds to replace these pipelines. We must explore global models, such as public-private partnerships (PPP), to bring in the private sector and secure the required investment,” he added.
The minister also addressed the persistent issue of fuel smuggling from Nigeria to neighboring countries, attributing it to the NNPC’s practice of selling petroleum products below the landing cost. He highlighted the role of border security personnel in facilitating this smuggling, which undermines Nigeria’s efforts to ensure energy security in the region.
“Nigeria plays a crucial role in Africa’s energy security, but our products find their way to other West African countries, making it difficult to curb smuggling. Even with all security forces in place, the involvement of Nigerians in the smuggling chain poses a significant challenge,” Lokpobiri remarked.
On the supply of crude oil to local refineries, including the Dangote Refinery, Lokpobiri expressed concern that the current production levels might not be sufficient to meet domestic demand. He underscored the importance of ramping up crude oil production to support both domestic refining and export needs.
“Our goal is to increase production to ensure the success of our midstream and downstream sectors. While we have resolved to supply crude to local refineries, the challenge remains whether we can produce enough to meet both domestic and export obligations,” he said.
The minister reiterated the Federal Government’s commitment to supporting local refining efforts and ensuring fair competition among refiners, both large and small.
“The path forward is to encourage local refining by providing the necessary feedstock. However, this remains a challenge if we do not have sufficient crude to supply. The Federal Government is determined to create a level playing field for all refiners in Nigeria,” Lokpobiri concluded.
This latest development highlights the critical need for investment in Nigeria’s oil infrastructure to ensure the country’s energy security and maximize its crude oil production potential.