FG States New Conditions for Dangote Refinery to Get Crude Supply, Speaks on Funding Pipeline
- The federal government claims that NNPC Limited does not now have the money required to repair outdated pipelines
- The minister of state for petroleum resources (il) said Nigeria also required to repair its deteriorating, old, and leaky pipelines
- Even if the country is capable of producing more than 1.7 million barrels, he pointed out that the problem is how to get the crude oil to the terminal
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
The Nigerian National Petroleum Company Limited does not currently have the necessary funding to rehabilitate aging pipelines, according to a declaration made by the Federal Government.
Source: Getty Images
At the recently concluded Energy and Labour Summit 2024, which was hosted in Abuja by the Petroleum and Natural Gas Senior Staff Association of Nigeria, this was said by Heineken Lokpobiri, the minister of state for petroleum resources (oil).
Speaking about the need to increase production and the divestment of foreign oil companies, Lokpobiri emphasized that Nigeria also needed to fix its aging, corroded, and expired pipelines.
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He pointed out that the issue is how to transport the crude oil to the terminal, even if the nation is capable of producing over 1.7 million barrels.
“Part of our problem is that pipelines that were traditionally transporting our crude were built in the 1960s and the 1970s and the lifespan is since over. We have identified that even when we can produce, evacuation is a big problem.
“The reason why pipeline vandalism is very easy to do is because the pipelines have all expired they completely corroded and so, anybody can just go and tap it and the thing is busted; but there are better technologies which are more expensive, there are better pipelines that other people are using in other countries, but they are not cheap, We also need to change our model.
To fix the outdated pipelines, he consequently advocated for public-private partnerships.
He noted that in order for the private sector to enter a country and make investments, it must have faith in that nation. He emphasized that this confidence was lacking during the previous 12 years, during which time there was no foreign investment in the country's oil firm.
“When this government, came we tried to rebuild the confidence and investors are coming,” Lokpobiri added.
Dangote refinery may suffer set back
He voiced concern over the supply of crude to Dangote and other domestic refineries, saying that unless production is increased, this could face difficulties.
“Our ambition is to ramp up production. It is only when we ramp on production that the midstream and the downstream can also be successful. You know we resolve at the Federal Executive Council to sell crude to local refineries – Dangote and the other refineries that are refining products for local consumption.
“But the bigger challenge is whether we have enough quantity to be able to supply them because of certain things that happened before we came. You will agree with me that when I became minister one year ago, we were doing barely about a million barrels, but today we’re doing 1.7mbpd approximately, inclusive of condensate,” Lokpobiri said.
He said the Federal Government would ensure there is healthy competition by being fair to both the small and the big refiners.
What do you need to know about Dangote refinery?
The Dangote Petroleum refinery is an industrial plant owned by Dangote group, It was inaugurated on 22 May 2023 in Lekki, Nigeria.
The refinery transforms crude oil into various usable petroleum products such as diesel, gasoline (petrol), jet fuel, and kerosene.
It produces Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene.
On 7 December, the refinery received its first delivery of 1 million barrels of Agbami crude oil.
The production of diesel fuel and aviation fuel A1 (the most common jet fuel except for the US) started in January 2024.
At the end of May 2024, Aliko Dangote announced that within 2 months the refinery would attain the capacity of 500,000 barrels a day.
In July 2024, Aliko Dangote made an offer to sell the Dangote Refinery to the Nigerian National Petroleum Corporation Limited after allegations of being a monopolist.
Directors receive 214% increase in fee
Legit.ng reported that the Nigerian National Petroleum Company Limited's executive and non-executive directors were paid N2.59 billion in fees and expenses for the 2023 fiscal year.
The amount shown here is a 214% increase over the N824 million paid to the directors in 2022.
The most recent financial statements for 2023 released by the corporation included this additional information.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Zainab Iwayemi (Business Editor) Zainab Iwayemi is a business journalist with over 5 years experience reporting activities in the stock market, tech, insurance, banking, and oil and gas sectors. She holds a Bachelor of Science (B.sc) degree in Sociology from the University of Ilorin, Kwara State. Before Legit.ng, she worked as a financial analyst at Nairametrics where she was rewarded for outstanding performance. She can be reached via zainab.iwayemi@corp.legit.ng
Ezennia Uche (Editorial Assistant)
