NNPC seeks collective effort to address pipeline vandalism

NNPC-TowersKunle Kalejaye 24 August 2016, Sweetcrude. Lagos – The Nigerian National Petroleum Corporation, NNPC, has called for a “collaborative out-of-the-box solution” to address the spate of pipeline vandalism which has considerably slashed the nation’s oil output in these challenging times of global low oil prices.

NNPC’s Group Managing Director, Dr. Maikanti Baru, made the call in Lagos at the 2016 annual conference of the National Association of Energy Correspondents, stressing that it was important to work together in order not only to surmount these challenges but to create sustainable pathway for the industry development.

“We are at a vantage position to address these challenges, to dip deep for collaborative out-of-the-box solution and working together, assured that we will not only surmount the challenges but create sustainable pathway for the industry,” Baru said.

Baru, who also spoke on the effect of low oil price on government revenue, said the development posed a grave danger for adequate funding of the national budget as oil account for approximately 90 percent of the nation’s foreign exchange earnings.

But, the bigger challenge, according to the NNPC boss, was to secure crude volumes to a level that ensures that the country deliver the revenue target.

Maintaining that efforts were in progress to resolve the current security challenges in the Niger Delta to guarantee volumes, Baru hinted that the country might not even be able to deliver volumes without adequately funding the industry.

He stated that the average $600 million monthly joint venture cash call requirement, coupled with flat budget over the past years, has led to under-funding of the industry.

“The under funding has stymied production growth. Therefore, managing this funding issue is our immediate challenge, and transparent innovative financing approaches are being reviewed to address these funding shortfalls,” Baru said.

NNPC’s group managing director added that sustainable returns needed to be maintained; and to achieve this, he said: “We are working on cost saving measures that will ensure safe and profitable operations of the assets while guaranteeing adequate margin for both government and investors.

“Initiatives such as service sharing for clustered assets, standardisation of operating framework and contracts, resource pooling and reducing contract cycle time will be pursued.”

About the Author