The Federal Government has announced that the Nigerian National Petroleum Company Limited lacks the necessary funds to rehabilitate aging pipelines.
During the recent Energy and Labour Summit 2024 in Abuja, the Minister of State for Petroleum Resources, Heineken Lokpobiri, addressed the critical need for pipeline upgrades amid the divestment of international oil companies and the push to increase production. He highlighted that Nigeria’s existing pipelines are old, corroded, and no longer fit for purpose.
Lokpobiri explained that although Nigeria has the potential to produce over 1.7 million barrels of crude oil, logistical challenges in evacuating this oil impede progress. He pointed to the pipelines from the 1960s and 1970s as a significant issue, stating that their obsolescence contributes to easy vandalism. He called for an urgent shift towards more advanced and costly pipeline technologies that are currently used in other countries.
He expressed doubt about the NNPC’s financial capacity to manage these necessary upgrades, emphasizing the need for public-private partnerships to address the problem. Lokpobiri stated, “We have to find a global model to engage the private sector,” noting that investor confidence, which has been lacking over the past decade, is essential for attracting investment in Nigeria’s oil sector.
Furthermore, he shed light on the issue of fuel smuggling, attributing this to the NNPC’s pricing strategies, which allow below-cost sales. He warned that without addressing these economic realities, smuggling will persist as long as the products remain cheaper than their cost in neighboring countries. He remarked, “If NNPC imports PMS and sells to marketers at perhaps N600 or below, smuggling cannot stop.”
On the subject of crude supply to domestic refineries, Lokpobiri expressed concerns about potential setbacks in meeting supply demands if production does not increase. He noted that supporting local refineries is critical to achieving national energy goals, stating, “Our ambition is to ramp up production.”
He reaffirmed the government’s commitment to ensuring fairness in the market, allowing both large and small refineries access to necessary resources. The conversation underscores the urgent need for strategic investments in the Nigerian oil sector to enhance production capabilities and ensure energy security in the region.
