A Review of the Nigerian Energy Industry

80% of Nigeria’s pipeline network has been vandalised — Govt

30 October 2014, Lagos—Respite seems not to be in sight for the chaotic traffic situation across the country, especially on roads to the country’s ports, as the Federal Government, yesterday, disclosed that 80 per cent of the country’s 5,120 kilometers pipeline network for petroleum product distribution have been vandalised.

In his presentation at the Oil Trading and Logistics 2014, African Downstream Expo in Lagos, Mr. Haruna Momoh, Managing Director, Pipelines and Products Marketing Company Limited, PPMC, further stated that the country’s refineries are currently producing about 5.10 million litres of Premium Motor Spirit, PMS, daily.

This, he said, is in contrast with the average local consumption of 40 million litres per day.

In addition, Momoh disclosed that the refineries are currently producing Automotive Gas Oil (AGO) of three million litres daily, in contrast with an average consumption of 12 million litres per day and Dual Purpose Kerosene (DPK) production of 2.1 million litres per day, despite an average consumption of 11 million litres daily.

He said the country is facing difficulties in distributing products through existing pipelines due to pipeline vandalism and rupture due to aging.

He further stated that the country is also faced with challenges of insecurity of pipelines to transport crude to existing refineries because of pipeline vandals.

He further lamented the limited number of trucks for product haulage and the bad road network, saying as a result, most marketers, in some cases, use the same truck to convey products that are intolerable, such as Premium Motor Spirit and Dual Purpose Kerosene.

To address the challenges of products supply in the country, Momoh said the country requires three million metric tonnes per annum of product supply; 10,000 to 25,000 metric tonnes capacity vessels and additional jetties; over 1,000 additional trucks with a 20 metric tonnes carrying capacity and 500 Liquefied Petroleum Gas filling plants among others.

To this end, he said there a lot of investment opportunities in the downstream segment of the oil sector, in the areas of construction/expansion of coastal storage facilities, provision of floating storage, dredging of the jetties to enhance draft and construction of more jetties.

He, however, stated that the Federal Government is exploring the use of Horizontal Directional Drilling (HDD) and use of modern technologies in pipeline surveillance and pigging, and also the replacement of the existing pipeline network.

Speaking in the same vein, James Gooder, Vice President, Business Development, Argus Media, said Nigeria and other African countries are faced with stagnant production of refined products and reliance on expensive long haul imports.

He emphasized the need for infrastructure investment at ports and inland depots, better roads and safer, more efficient transportation.

He stated that the mismatches between pricing regimes encourage informal markets, cross border fuel smuggling, differing product specification standards and adulteration of fuels.

Also speaking, Mr. Tunji Rabiu, Head, Business Operation, Forte Oil Plc, lamented the delayed payments of the Petroleum Support Fund, PSF, receivables, saying the payments are not made within the 60 days stipulated in the Act.

He listed other challenges hindering downstream operations to include: “Multiplicity in reporting and compliance requirements with various government agencies; high dependency on deplorable road infrastructure and inadequate road networks for effective products distribution as a result of poor pipeline integrity.

“Pipeline vandalisation and ruptured pipelines. Limited number of jetties -there are currently a high number of vessels on the queue for few berthing space prevent timely receipts of product and thereby increasing product cost as a result of cost incurred on  demurrages.”

However, Mr. Abayomi Awobokun, Chief Executive Officer, Oando Downstream, said, “With Nigeria’s current robust economic, stable democracy, industry reforms, the Petroleum Industry Bill (PIB) and growing population, the future looks bright for the downstream industry.”

– Vanguard

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