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

This statement was made by the Minister of State for Petroleum Resources, Heineken Lokpobiri, during the recent Energy and Labour Summit 2024, hosted by the Petroleum and Natural Gas Senior Staff Association of Nigeria in Abuja.

Lokpobiri addressed the issue of international oil companies divesting and the urgent need to increase production, highlighting that Nigeria must also focus on repairing its outdated, corroded, and deteriorating pipelines.

He pointed out that even if the country manages to produce over 1.7 million barrels of crude oil, the significant challenge remains in transporting it to the terminal.

"One of our key issues is that the pipelines originally used for transporting our crude were constructed in the 1960s and 1970s, and their operational lifespan has long expired. We have recognized that even with increased production, evacuation poses a substantial challenge."

The ease of pipeline vandalism can be attributed to the fact that many pipelines have reached the end of their lifespan and are severely corroded, allowing anyone to easily access and damage them. While there are more advanced and costly pipeline technologies being utilized in other countries, the current infrastructure in place is inadequate. A shift in our operational model is necessary.

Regarding the NNPC, our joint venture partner, it remains uncertain whether they possess the financial resources to replace these deteriorating pipelines. Lokpobiri expressed skepticism about their financial capability. He emphasized the need for public-private partnerships to address the issue of aging pipelines, advocating for a global model that encourages private sector involvement.

For private investors to engage in any country, they must have confidence in its stability and governance, which has been lacking over the past twelve years due to a decline in foreign investment in the national oil sector. Lokpobiri noted that the current administration has made efforts to restore investor confidence, resulting in renewed interest.

Furthermore, the minister pointed out that the smuggling of fuel from Nigeria to neighboring countries is a direct consequence of the NNPC's pricing strategy, which involves importing and selling fuel below the actual landing cost.

He highlighted Nigeria's significant role in Africa's energy security, explaining that any petrol imported into Nigeria tends to be distributed throughout West Africa, making it difficult to curb smuggling. He also mentioned that border security personnel are complicit in this issue.

The speaker noted that even with a full deployment of law enforcement on the roads, the issue of smuggling persists, as the individuals involved are Nigerians.

He emphasized that for Africa to achieve energy security, Nigeria must assume a pivotal role. Regarding the supply of crude oil to Dangote and other domestic refineries, he expressed concerns about potential disruptions unless production levels are increased.

"Our goal is to enhance production. Only by increasing output can we ensure the success of both the midstream and downstream sectors. The Federal Executive Council has resolved to supply crude to local refineries, including Dangote, which are essential for local consumption.

However, the primary challenge lies in whether we can provide sufficient quantities due to previous circumstances. When I took office as minister a year ago, production was around one million barrels per day, but we have since increased it to approximately 1.7 million barrels per day, including condensate," Lokpobiri stated.

He further remarked, "Promoting local refining is essential. We should seek investors to extract and utilize this crude, allowing us to fulfill our domestic needs while also exporting some to generate additional revenue. We are dedicated to supporting local refineries with the necessary feedstock.

If we aim to supply Nigerian refineries but lack the crude, it remains merely a well-articulated legal provision." He assured that the Federal Government would foster healthy competition by treating both small and large refiners equitably.