NEITI: $20bn Required Annually To Bridge Nigeria’s Gas Infrastructure Gap

The Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI), Dr Ogbonnaya Orji,

The Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI), Dr Ogbonnaya Orji, on Monday said that Nigeria will need an estimated $20 billion annually to bridge the widening gas infrastructure gap in the country.

Orji spoke at the Nigeria International Pipeline and Security Conference in Abuja, organised by the Pipeline Professionals Association of Nigeria (PPAN) as well as Energy and Corporate Africa.

He spoke on the theme: “Bolstering Security, Protecting Petroleum Industry Assets for Improved Economy”.

The executive secretary explained that oil theft and losses in Nigeria had become a national emergency that poses serious threat to oil exploration and exploitation with huge negative consequences on economic growth, business prospects and profit earnings by oil companies.

Quoting from NEITI’s 2021 Oil and Gas Industry Report, he explained that the sector accounted for 72.26 per cent of Nigeria’s total export and government’s foreign exchange, 40.55 per cent of government revenue and provided 19,171 jobs.

However, he noted that despite the strategic contributions, the country is yet to derive optimal benefits from its oil and gas resources due to oil theft and losses through pipeline vandalism, pipeline integrity compromise, outright sabotage, and general insecurity in the region.

From NEITI’s reports over the years, and recently insights from its membership of the special investigative panel on oil theft and losses, Orji noted that the criminal exploits take place most times in atmosphere of communities’ complicity and conspiracy of silence.

“It is also a matter of fact, that many of your members are directly and indirectly involved in providing the skills and knowledge required to perpetrate oil theft. As you are aware, illegal connections, pipeline clamping etc cannot be done by just anybody.

“And so, your association is largely complicit by failing to put in place stringent regulation and appropriate sanctions to check involvement of your members,” he added.

From empirical data of oil theft and losses, Orji reiterated that 619.7million barrels of crude, valued at 46.16billion or N16.25 trillion was heisted between 2009 and 2020.

In addition, Nigeria, he said, lost 4.2 billion litres of petroleum products from refineries, valued at $1.84 billion at the rate of 140,00 barrels per day, from 2009 to 2018.

“Thus, the total value of crude losses between 2009 and 2020 is higher than the size of the country’s foreign reserves and almost 10 times Nigeria’s oil savings in Excess Crude Account (ECA),” Orji stressed.

He also disclosed that in the last five years, 2017 to 2021, Nigeria recorded 7,143 cases of pipeline breakages and deliberate vandalism, resulting in crude theft and product losses of 208.639 million barrels valued at $12.74 million or N4.325 trillion.

According to him, during the same period Nigeria spent N471. 493 billion to either repair or maintain pipelines.

Stressing that curbing oil theft and pipeline vandalism was necessary to restore investors’ confidence and rebuild trust in the industry, he argued that the economy cannot grow in an atmosphere of oil theft, pipeline vandalism, and general insecurity in the oil producing communities.

At 200 trillion cubic feet, Nigeria, he said, has the largest gas reserve in Africa and the 9th largest in the world.

“We recommended to government to urgently put in place a revised national policy on gas utilisation. Such a policy needs to be clear on the specific roles of the industry, government and investors in the implementation of the plan.

“Similarly, the gas utilisation plan should show the market-driven opportunities that would successfully translate the gas plans into sustainable economic growth.

“And for the gas utilisation policy to work, there is a compelling need for deliberate, ambitious investment in gas infrastructure, especially gas pipelines to provide connectivity across upstream facilities to processing and power plants and access the potential huge market. To achieve this, an estimated investment of $20bn annually is needed to bridge Nigeria’s gas pipeline/infrastructure gap,” Orji added.

Describing the discourse as momentous, the Speaker of the House of Representatives, Mr Tajudeen Abbas, said that the National Assembly will continue to create a sound legal framework for the oil and gas sector.

He stressed that it was the reason the lawmakers made the Petroleum Industry Act (PIA) a reality, explaining that although not perfect, the document now provides clarity for the industry.

Abass noted that there’s now a special committee of the National Assembly on oil theft because of the seriousness the House of Representatives attaches to the sector which bears a huge percentage of the country’s revenue.

While calling for collaboration, Abass who was represented by the Chairman, House Committee on Petroleum (Upstream), Alhassan Doguwa noted that anybody found culpable of oil theft or vandalism should be punished to act as a deterrence to other criminals.

On his part , the Chief Executive, Oilserv, Dr Emeka Okwuosa, noted that Nigeria should begin to separate common criminals who break into oil assets and steal crude from those who are protesting for a better deal for the Niger Delta.

Okwuosa whose company is partly building the Ajaokuta-Kaduna-Kano (AKK) pipeline, noted that building pipelines require complex systems, conquering treacherous terrains and deployment of modern technologies.

He noted that it’s difficult to monitor the current pipelines in the country because at the time the pipelines were laid, the technology that supports real-time monitoring of the assets was not available.

Also present at the event was the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr Gbenga Komolafe, who was represented by the Executive Commissioner, Development and Production, Dr Habib Nuhu.

Also in attendance were the Chief Executive, Energy and Corporate Africa, Sunny Oputa, Chairperson, PPAN, Geoff Onuoha, Country President, Schneider Electric, West Africa, Ajibola Akindele, among others.

Emmanuel Addeh