Nigeria Plans to Buy Off Pipeline Attacks

Nigeria's minister for petroleum resources, Ibe Kachikwu has said the government plans to incentivise those involved in illegal refining not to attack the country’s oil and gas pipelines.

The federal government intends to include the country's illegal refiners in a new ‘modular refineries scheme’ intended to help alleviate illegal bunkering and pipeline vandalism, the minister told the ongoing Nigerian Association for Energy Economics (NAEE) conference on April 24.

Kachikwu, formerly NNPC's CEO and before that a senior Exxon executive in Africa, said that the government has been having constructive discussions with some illegal refiners. He said the inclusion of such illegal refiners would help the government manage petroleum operations costs in the country.

Damaged pipelines have limited supplies of crude oil to export terminals such as Forcados as well as supplies of gas to power plants - causing sub-Saharan Africa's largest upstream gas producing nation to face chronic electricity shortages. Equally, Niger Delta communities have been victims of polluted air and water, degraded forests, biodiversity loss, and higher than normal temperatures because of such unregulated refineries. 

Under this initiative, all illegal refiners and Niger Delta communities would be integrated into the government’s modular refineries concept, to avoid duplicate and unregulated operations.

Nigeria's minister of state for Petroleum Resources Dr Ibe Kachikwu (Photo credit: NNPC)

Modular refineries are made up of smaller and mobile parts, and of varying but small capacities.

Since March 2017, the Buhari administration made the decision to supply crude oil to illegal refineries at a reasonable price, as an incentive to stop crude oil theft and vandalisation of pipes.

To develop a working plan, the government is working closely with state-owned NNPC, marginal field owners, upstream operators, large refineries, and various technical services providers.

But this step by the government could end up being another in a long line of decisions that are yet to be properly implemented with visible results, like the Nigerian Gas Master Plan and the proposed Petroleum Industry Bill. Moreover, there is a risk that some of the more ideological militants may resume attacks on oil and gas pipelines, although attacks this year are down on last year.

Omono Okonkwo