Nigerian National Petroleum Corporation (NNPC), has revealed that only 38 percent of the over 5,120 kilometres owned by the state oil company is functioning.
Although the Group Managing Director, NNPC, Mele Kyari, while admitting that pipelines remained the safest way to move crude oil and products, he said the Corporation has struggled to efficiently operate the facilities over the past two decades.
Speaking at Energy & Corporate Africa-organised forum on, “Next Level: Critical Pipeline Infrastructure and Promoting Gas Utilisation Option Post Cover-19,” he said persistent vandalism remained the biggest challenge of the infrastructure with recurring product losses.
Kyari, who was represented by the Managing Director, Nigerian Pipeline and Storage Limited, Ada Oyetunde, noted that the dearth of investment, accelerated deterioration, and lack of investment in technology to secure the pipeline are critical barriers to the development of the downstream infrastructure.
“Currently about 38 percent of the pipeline system is operational,” he stated, adding that with the mandate to overhaul the refineries to 90 percent capacity, there was a need to improve the pipelines.
He also argued that pipelines, depots and terminal infrastructure are being revamped across Nigeria with some of the projects on the verge of tendering, adding that the build, operate and transfer (BOT) model is being used to resuscitate most of the assets in the face of dwindling revenue and economic challenges.
The new pipelines being designed would come with holistic monitoring technology, including supervisory control and data acquisition systems and other technologies to detect intrusion and leaks, as well as clear right-of-way and smart fencing.
Kyari disclosed that operators would charge market-reflective tariffs on the infrastructure to allow them to recover their cost and discharge obligations that affect safety, environmental, tax, legal, and return on investment.
Chairman, Pipelines Professionals Association of Nigeria (PLAN), Geoff Onuoha, stressed the need for the country to properly maintain the pipelines across, which are already ageing while looking for better ways to operate the assets.
He also urged experts to chart the right path, while policymakers in the public and private sectors should devise a collective approach to addressing the sector’s challenges.
Chief Operating Officer, Oilserv, GbiteFalade, noted that gas resources are huge, and must push the country to invest in infrastructure to harness them.
He argued that insufficient pipelines are a critical hurdle to the government’s efforts to boost gas utilisation, and a disincentive to foreign direct investment (FDI) for the development of the upstream sector.
Falade said: “Until sufficient investments to proliferate the gas pipe system are made, development of the gas domestic market will remain non-viable and uneconomic,” while urging appropriate pricing of gas, compliance with extant market regulations as well as commercially-structured and project-financed approach.
Head, Pipeline Engineering, Shell, Ayoola Olatunji, said Nigeria is sitting on many resources that would have improved the economy, addressed energy challenges, and others through gas utilisation. He noted that a lot still needs to be done on gas-to-power and encouraging investment in gas systems to home.