Nigeria Spends Billions On Pipeline Maintenance As Hundreds Are Vandalised Annually

Oil and gas is the lifeblood of Nigeria’s economy.

A total of 1,161 pipeline points were vandalised across Nigeria in the 21 months between January 2019 and September 2020.

Nigeria spends billions of naira annually to maintain pipelines used to transport oil products, with hundreds of such pipelines vandalised annually, a PREMIUM TIMES review of official data shows.

A total of 1,161 pipeline points were vandalised across Nigeria in the 21 months between January 2019 and September 2020, figures mined from the monthly financial reports of the nation's public oil company, NNPC, have shown.

The vandalism happened across five pipeline axes nationwide. The Port Harcourt axis of the pipelines recorded the largest share of the "pulverized points" within this period with 538 points being damaged.

This is followed by the Mosimi-Ibadan axis with 535 points being damaged. Other oil pipelines in Gombe (46), Kaduna (32) and Warri-River Niger (10) accounted for the remaining oil pipelines theft in almost two years.

The highest monthly damages recorded in any of the five axes in the period under review were recorded in 2019, with the highest case being in January 2019 with 230 cases of vandalism.

The second-highest was in July of that year with 228 cases. This is trailed by the 186 theft cases in September 2019 and the 159 cases in August of the same year.

In September 2020, when the last edition of the report was published, a total of 21 pipeline points were vandalized, a 43 per cent decrease from the 37 points recorded in August 2020.

Prior to that, meanwhile, the country had recorded 2,181 vandalised pipeline points between October 2018 and October 2019.

"Product theft and vandalism have continued to destroy value and put NNPC at a disadvantaged competitive position," NNPC said in one of the reports.

Although the vandalism has ebbed in recent months, it continues to take a huge financial toll on the nation's lean purse.

From January 2019 to January this year alone, repairs of the pipelines and other facilities came at an outlay of about N15 billion.

Over a third of that amount was expended within two months. Last May saw NNPC spending about N3.2 billion on repairs. Prior to that, March 2020 gulped N2.6 billion for the same purpose.

Maintenance cost

A PREMIUM TIMES' review of the data obtained from the NNPC's monthly FAAC reports from December 2019 to January 2021 showed that the company spent a total of N59.1 billion on the repair and management of the pipelines within a year.

Strategic holding took the largest chunk of the cost at N19.1 billion. The repair of pipelines and other facilities cost N15 billion; marine distribution, N10.9 billion; security and maintenance, N8.9 billion; and pipeline management cost, N5.1 billion.

The spending on the pipelines was highest between March and May of 2019. In May, N8 billion was spent. In April it was N7.8 billion and March, N7.7 billion.

In February, NNPC said the country is losing an average of 200,000 barrel per day of its crude oil production to saboteurs and illegal pilfering by criminals, a quantum leap from the 70,000 b/d of crude output lost to theft as of August 2020.

"We have two sets of losses, one coming from our products and the other coming from crude oil. In terms of crude losses, it is still going on. On average, we are losing 200,000 b/d," NNPC managing director, Mele Kyari, said in a statement at the time.

In 2019, the Nigeria Extractive Industries Transparency Initiative (NEITI), the nation's oil auditing agency, said in a report that OPEC members lost about 138,000 b/d of crude oil to theft over the past 10 years worth $40.06 billion.

Pipeline operations

Pipeline operation started in 1979 under the aegis of the defunct Pipelines and Products Marketing Sector (PPMS), which was renamed Pipelines and Products Marketing Company (PPMC).

However, due to the high cost of maintenance and pipeline repair caused by incessant vandalism on the product lines, NNPC unbundled PPMC and created three new companies in 2016.

The new companies include the Nigerian Pipelines and Storage Company Ltd (NPSC); Petroleum Products Marketing Company (PPMC); and NNPC Shipping.

The maintenance and running of the nation's pipelines is the core mandate of the NPSC.

The pipelines are strategically located across the country and span a stretch of about 5,120 km, according to the NNPC.

Petroleum products are moved through these pipelines by pump, using mainline and booster pumps, and some pump stations also complement the work of the pipelines.

The networks of pipelines are connected to 21 white product depots (storage facilities for highly refined mineral oils used in pharmaceuticals, cosmetics and chemical processing) and tank farms (also called oil terminal or depot, which are storage facilities for liquid petroleum products or petrochemicals) across the nation.

The movement of the crude and the white products was done through these pipelines over the years until the act of vandalism rendered the pipelines inefficient.

Because the pipeline network has suffered from "incessant unauthorized interference," NNPC has called for "horizontal directional drilling (HDD) for pipelines, in addition to intrusion detection and cathodic protection systems."

NNPC boss Kyari said that while attacks on its key oil products pipeline network (called system 2B which transports imported gasoline) has reduced considerably, oil theft has been on the rise.

While it is true that criminals and oil saboteurs are targeting the pipelines, the oil facilities are also ageing. Incessant spills and leaks are common, leading to deadly explosions that kill many with hardly anyone brought to book.

For instance, based on forensic analysis by BBC Africa Eye, a gas explosion that killed over 23 people and destroyed a girls' boarding school in Soba, a residential neighbourhood of Lagos, last March was said to have been caused by the pressure of a truck.

As against the official explanation by NNPC that the blast was caused by a truck hitting a gas cylinder, BBC found that a laden truck parked on an eroded, unsurfaced road that had been softened by rainwater led the pipeline to breaking point, releasing a cloud of vapourised flammable petroleum products that sparked fire.

Analysts believe that if NNPC is able to ramp up its pipeline operations, the performance of Nigerian refineries should improve.

This month, NNPC and Italian company Maire Tecnimont signed a controversial $1.5 billion contract for Port Harcourt refinery and pipeline repairs to ramp up the nation's petroleum products production.

NNPC has said it is in "collaboration with the local communities and other stakeholders continuously strive to reduce and eventually eliminate this menace."

The move has yielded some results in recent months.

In March, the Delta State Police Command arrested three persons for vandalising armoured cables and other electrical installations at PPMC Warri Refinery at tank 82 in the refinery complex.

Identified as Saturday Idoge, Sunday Ishenive and Philip Ngbodi, the command's acting spokesperson, Bright Edafe, said the suspected vandals are staff of Alert Private Security Company attached to the refinery.

Exhibits such as ladder, industrial iron cutters, vandalized armoured cables and other items were recovered from them.

Also, in its recent raid, the Ondo State Command of the Nigeria Security and Civil Defence Corps impounded about 35,000 litres of Automated Gas Oil (AGO), also called diesel, at an illegal surface depot in Ore, Odigbo LGA of the state, where thousands of litres of the product are syphoned by vandals.

(Support for this report was provided by the Premium Times Centre for Investigative Journalism (PTCIJ) through its Natural Resource and Extractives Programme).

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