In this interview, Olufemi Soneye, the Chief Corporate Communications Officer of NNPCL speaks on the game-changing nature of its on-going pipelines and depots rehabilitation project which he says is set to resolve longstanding challenges in petroleum supply and strengthen the country’s energy infrastructure for the long term.
THERE have been concerns about sustainability regarding the so-called rehabilitation efforts of refineries by NNPCL…
When you say so-called, what exactly do you mean? The term so-called does not connote optimism and that is not in the interest of our collective aspiration as a people and as a nation.
The NNPC Ltd. is working towards transforming Nigeria into a self-sufficient producer and net exporter of refined petroleum products and a very first step in that direction is the successful rehabilitation work that has birthed the renewed operations of the Port Harcourt and Warri refineries. The rehabilitation and upgrade of the Old Port Harcourt and Warri Refineries by the end of 2024 marked a significant milestone in this journey.
And, as you know, work on the New Port Harcourt and Kaduna Refineries is at advanced stages, reinforcing the commitment to eliminating fuel importation.
The reason the term so-called came in is because of the manifest challenges that are clear and present threats to our operations…
But there are still challenges that are threatening your operations?
Yes, as you rightly observed, in every human endeavour, there are challenges everywhere. In fact, any human engagement that does not come with its challenges may never stand the test of time because challenges would rear their heads at some point.
Yes, despite the progress we have made, several challenges still threaten the sustainable operation of the refineries and the efficient supply of petroleum products…
Are you talking about the pipelines, for instance?
I was coming to that. The aging pipeline infrastructure is an issue that we have to deal with. Nigeria has a 5,120 km network of crude oil and product pipelines connected to 22 storage depots (terminals). The infrastructure is dilapidated, making product transportation inefficient.
Then there is the issue of pipeline vandalism and security concerns. Frequent pipeline vandalism has led to losses and disruptions in supply.
In the past, refineries have been forced to shut down due to full storage tanks and inability to evacuate products and rather than use the pipelines, this has led to an over-reliance on road transport – the breakdown of pipelines has resulted in increased use of trucks for product distribution and this has led to frequent road accidents, fires, and high transportation costs. As the saying goes, Rome was not built in a day and all that we are doing now is to re-commit to the ethos and virtues of protecting critical assets with a view to avoiding mistakes of the past, the consequence of which we are facing and pausing for now.
But there must be solutions…
Yes, whereas there is limited financial resources, which continues to pose a challenge in executing both refinery and pipeline rehabilitation projects simultaneously, we are exploring creative and innovative approaches to ensure a cost-effective funding model to proceed with the pipeline and depot rehabilitation.
For instance, to ensure the sustainability of refinery operations and improve the supply chain, NNPCL designed a robust rehabilitation plan for pipelines and depots: We will be deploying a new financial model: Finance, Build Operate and Transfer (FBOT) approach.
Unlike the refineries, which were funded through loans, the pipeline and depot rehabilitation project is based on the FBOT model. Under this model, contractors finance the project, operate it for a set period to recover their investment, and then transfer ownership back to NNPC Ltd.
The entire pipeline and depot infrastructure was divided into four lots, with contracts awarded to different private companies. The concession agreements, signed in 2023, outlined key rehabilitation and upgrade activities.
The activities include but may not be limited to the construction of new crude oil and product pipelines to replace obsolete ones, implementation of advanced technology to enhance pipeline security and prevent vandalism, rehabilitation and modernization of storage terminals to support increased refining capacity.
These outlined activities look ambitious, but how realisable are they?
Despite the challenges, the pipeline and depot rehabilitation project has made significant progress: Lot 1: This will involve rehabilitation of pipelines from Bonny to Port Harcourt, including depots in Aba, Enugu, Makurdi, and Yola. We have started rehabilitation at Port Harcourt terminal, enabling seamless product loadout. Lot 2: We will be rehabilitating the pipelines from Escravos to Warri Refinery, extending to Benin and Ore depots and this rehabilitation at Warri terminal has enabled the restart of smooth product distribution. Lot 3: All the pipelines and depots associated with Kaduna Refinery, including crude supply from Warri to Kaduna and product distribution to Kano, Gusau, Jos, Gombe, and Maiduguri will be handled here. Already assessment of the Warri-Kaduna crude pipeline for full rehabilitation has begun Lot 4: We have engaged in total rehabilitating of coastal pipeline network, spanning Atlas Cove-Mosimi-Ore-Ibadan-Ilorin. Mobilization has begun for the rehabilitation of Atlas Cove terminal and pipeline connections. Mobilization letters have been issued to some of the companies engaged to handle them upon the submission of Bank Performance Guarantees and NPSC is closely working with the concessionaires to fast-track project execution.
When would these be completed?
The pipeline and depot rehabilitation project is expected to be completed within two to three years. Upon completion, Nigeria will achieve the following: sustainable crude oil supply to refineries; seamless product distribution through pipelines, reducing reliance on trucks; improved energy security and reduction in fuel importation; lower transportation costs and reduced road hazards caused by fuel tankers.
We can assure Nigerians that the NNPCL’s pipeline and depot rehabilitation project is a game-changer in achieving Nigeria’s energy security and self-sufficiency in refined petroleum products.
With a structured financial model, strategic partnerships, and committed execution, the initiative is set to resolve longstanding challenges in petroleum supply and strengthen the country’s energy infrastructure for the long term.
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