NNPC Lacks Funds to Repair Old Pipelines – FG

The Federal Government has stated that the Nigerian National Petroleum Company Limited lacks the necessary funds to rebuild aging pipelines.

The Minister of State for Petroleum Resources, Heineken Lokpobiri, made this statement at the recently concluded Energy and Labour Summit 2024 organised by the Petroleum and Natural Gas Senior Staff Association of Nigeria in Abuja.

Lokpobiri, while discussing the divestment of international oil companies and the need to increase production, emphasised that Nigeria also needed to repair its old, corroded, and expired pipelines.

He noted that even if the country could produce more than 1.7 million barrels of crude oil, the problem is how to transport it to the terminal.

Lokpobiri 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 pipeline vandalism is very easy to do is because the pipelines have all expired,  they are completely corroded and so, anybody can just go and tap it and the thing is burst; 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 the money.”
Consequently, he advocated public-private partnerships to address the aging pipelines, stating, "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 invest in any country, he said they must have confidence in such a country, emphasising that this was lacking in the past 12 years when there was no foreign investment in the nation's oil company.

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

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

He stated that Nigeria plays a critical role in Africa's energy security, and that smuggling cannot be stopped as long as the NNPC sells fuel at a low price, with security agents at the borders also being involved. 

The minister expressed concern that the supply of crude to Dangote and other local refineries might suffer a setback unless production is increased. 

He emphasised the importance of supporting local refining and exploring for more crude to meet domestic obligations and generate export revenue.