The Federal Government has announced that the Nigerian National Petroleum Company Limited (NNPC) does not have the financial resources needed to rebuild the country’s aging pipelines.
Heineken Lokpobiri, the Minister of State for Petroleum Resources (Oil), made this statement at the recently concluded Energy and Labour Summit 2024, organized by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja.
Lokpobiri highlighted the challenges posed by the divestment of international oil companies and the need to increase oil production. He emphasized that Nigeria’s pipeline infrastructure, which is crucial for transporting crude oil, is in a state of disrepair. “Our pipelines are old, corroded, and beyond their lifespan,” he stated. “Even if we can produce more than 1.7 million barrels of crude oil, evacuating it to the terminal is a significant issue.”
He explained that the pipelines, constructed in the 1960s and 1970s, are now severely degraded. “Pipeline vandalism is rampant because these pipelines are completely corroded and can be easily tampered with. There are better technologies and more robust pipelines available, but they are costly. The NNPC, our joint venture partner, currently lacks the funds to replace these pipelines,” Lokpobiri revealed.
In light of this, he advocated for public-private partnerships (PPP) as a solution to the pipeline problem. “We need to adopt the global model of PPP to bring in private sector investment,” Lokpobiri said. He acknowledged that investor confidence in Nigeria’s oil sector had waned over the past 12 years but noted efforts by the current administration to rebuild that confidence.
On the issue of fuel smuggling, Lokpobiri pointed to the NNPC’s practice of importing and selling fuel below landing costs as a key factor. “Nigeria plays a crucial role in energy security across Africa. The smuggling of fuel into neighboring countries is inevitable as long as the NNPC continues to sell fuel at subsidized rates,” he said, adding that security agents at the borders are complicit in the smuggling operations.
Regarding the supply of crude oil to local refineries, including Dangote Refinery, Lokpobiri expressed concerns about meeting domestic production needs. “Our goal is to increase production because only with higher output can we sustain both midstream and downstream operations,” he explained. Lokpobiri noted that while the Federal Executive Council had resolved to sell crude to local refineries, including Dangote and others, the challenge remains whether production levels can meet this demand.
He concluded by stressing the importance of supporting local refineries and ensuring fair competition among all players in the sector. “We are committed to providing the necessary feedstock to local refineries. However, if we do not have the crude oil to supply, these plans will remain unfulfilled,” Lokpobiri stated.
