Nigeria’s cost of pipeline repairs and management may soon hit N1 trillion as facilities were damaged 9,420 times in five years, as vandals steal oil and gas. This sum and other recorded losses could build a refinery with the capacity to refine 650,000 barrels per day if the five-year leakage were saved.
The statistics on pipeline vandalisation and billions of naira spent on repairs particularly raises critical questions about the effectiveness, or otherwise, of the Federal Government’s subsisting multi-billion-naira pipeline surveillance scheme, the contracts of which were awarded by the Nigerian National Petroleum Corporation (NNPC).
Rough estimates put Corporation’s pipeline security contracts with various companies at N9.3 billion. In 2018, a well-known award of surveillance contract to an indigenous firm for the protection of the strategic 87-kilometre Trans Forcados Pipeline (TFP) was valued at about $18.4 million (about N7 billion).
With this level of leakage on pipelines alone, the country’s annual budget, revenue base, as well as execution of other developmental plans may still remain elusive.
As of June 2020, the country recorded a total of 9420 pipeline vandalisations, leading to disruption of activities in the upstream and downstream sectors.
A total of 1,067 vandalised points was recorded between June 2019 and June 2020, according to the NNPC, while between January 2015 and June 2019, pipelines were vandalised a total of 8,353 times.
Last year, despite the award of multimillion-dollar pipeline surveillance contracts to private security companies, there was a loss of 22 million barrels of crude oil between January and June.
The vandalism incidents, according to NNPC reports in five years, were recorded in Mosimi (Ogun state), Kaduna, Port Harcourt, Warri and Gombe. Vandal activities at the Atlas Cove-Mosimi and Mosimi-Ibadan have increased in recent times, with notable incidents recorded this year in Lagos alone.
Between January 2015 and June 2019, the Federal government said it spent over N556 billion on oil pipeline repairs and maintenance across the country. This figure is contained in the monthly financial and operations reports released by the NNPC.
The Corporation disclosed that N118.61 billion was spent on pipeline repairs and management in 13 months, between May 2019 and May 2020; while N34.89 billion worth of petroleum products were stolen in the same period. N6.24bn was however expended in June this year on repairs.
The NNPC, last May, recorded a 43 per cent drop in cases of willful damage of its oil pipeline infrastructure by suspected thieves.
The May 2020 version of the NNPC Monthly Financial and Operations Report (MFOR) indicated that 37 pipeline points were vandalised. This represents about 43 per cent decrease from the 65 points recorded in April 2020.
The NNPC, however, stated that it was collaborating with local communities and other stakeholders to curtail this menace.
Though it stated that unauthorised interference was one of the strongest reasons it introduced horizontal directional drilling to the project, stakeholders wanted a review of strategies in protecting oil assets.
For instance, Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, urged oil firms and the NNPC to review strategies deployed in the process.
According to him, it was high time operators explored technology to address the security concerns while deepening efforts with communities where they have assets.
While the Stakeholder Democracy Network (SDN) had questioned the nation’s pipeline surveillance contracts calling it a misnomer, many insisted that losses would worsen if the underlying challenges were not addressed.
A report of the Nigeria Natural Resource Charter (NNRC) stated that, in 2016, about ₦3.8 trillion was recorded as losses from crude oil theft, sabotage and pipeline vandalism.