The menace of pipeline vandalism and insecurity has seen Nigeria expend N12.43billion on pipeline protection and maintenance from January 2022 to June 2022.
Federal Government has also paid $4.04billion to five international oil companies as cash call arrears repayment, according to data obtained from the the Nigerian National Petroleum Company (NNPC) Limited.
Figures from the oil company indicated that pipeline security/maintenance gulped N1.1billion, N368million and N2.61billion in January, February and March 2022 respectively.
The NNPC spent N498million in May and N8.35billion in June to secure and maintain its pipelines, while the firm subtracted N464million in April from the total amount during the review period.
Nigeria’s crude oil production has continued to slump due to the repeated vandalism of pipelines and attendant theft of humongous volumes of crude.
The N12.43billion spent in the first six months of this year to protect pipelines came as the oil company recently contracted the surveillance of its pipelines to a contractor, a development that elicited diverse reactions.
On August 30, 2022, NNPC said its award of multi-billion naira pipeline surveillance contract to a former leader of the Movement for the Emancipation of Niger Delta, Government Ekpemupolo, popularly known as Tompolo, was the “right decision.”
The Group Chief Executive Officer, NNPC, Mele Kyari, had told journalists in Abuja recently that the decision was due to the need for Nigeria to hire private contractors to man its oil pipeline network due to a massive oil theft.
He said, “The security agencies are doing their part. End-to-end pipeline surveillance would require the involvement of private entities and community stakeholders. We need private contractors to man the right of way to these pipelines. So, we put up a framework for contractors to come and bid and they were selected through a tender process. And we believe we made the right decision.”
The pipeline surveillance contract is reportedly worth N48billion per year (N4billion per month), and several groups in the Niger Delta have raised concerns about the deal.
Last week, a renowned Niger Delta activist and Igba of Warri Kingdom, Chief Rita Lori-Ogbebor, said the pipeline surveillance contract should be revoked to avert impending war in the region, as various oppositions to the contract increased.
Lori-Ogbebor, who spoke to journalists in Abuja, argued that it was the responsibility of the Federal Government to manage the Niger Delta and not an individual or company.
She said, “We should be worried about what is happening in the Niger Delta currently, because that contract is causing tension in the region. I am calling on the entire world to what is happening in the Niger Delta. There is a drum of war in that region.
“There is a show of ammunition without fear. People show them without fear. I am urging the Federal Government to withdraw the contract from Tompolo because as the custodian of this country it cannot leave Niger Delta in the hands of few persons to manage.”
Meanwhile, latest figures from the national oil company on cash call arrears repayment indicated that the Federal Government, through NNPC, had so far paid $4.04billion to five of its joint venture international oil companies as at July 31, 2022.
Cash calls are sent by joint venture operators to non-operating partners for payment in the light of anticipated future capital, operating expenditures or the need for additional capital contributions.
The Federal Government, through the NNPC, has, over the years, piled up unpaid bills, referred to as cash calls, which it was obliged to pay the IOCs with which it had joint ventures for oil exploration and production.
The government’s joint venture partners in this arrangement include: Shell Petroleum Development Company, Mobil Producing Nigeria, Chevron Nigeria Limited, Total Exploration and Production Nigeria, and Nigeria Agip Oil Company.
The report showed that the government had completely cleared its cash call debts to Mobil and Chevron, while a total $925.4million had been paid to Shell, leaving an outstanding balance of $447.12million.
Total payments to date (July 31, 2022) to Total and Agip by NNPC were $545.86million and $634.22million, while outstanding balances to the companies were put at $65.11million and $140.44million respectively.
The total renegotiated debt between the government and the five IOCs was 44.689billion, while $4.04billion has been paid so far, leaving a balance of $652.66million.
In 2016, the national oil company signed the cash call repayment agreements with the five IOCs to defray the cash-call arrears within a period of five years after many years of its indebtedness to JV partners.
Also, the government, through the Federal Ministry of Petroleum Resources, negotiated a discount with the five IOCs in December 2016.
The negotiations led to the reduction of the debt from about $5.1billion to $4.68billion, as the Federal Government, through NNPC, had since continued to reduce the debt payments in installments.