The Nigerian National Petroleum Company (NNPC) was established by the Government of Nigeria in April 1977, with the aim of securing regular domestic supply of petroleum products for the people of Nigeria, and establishing infrastructure, including pipelines, for the production of refined products for export. The NNPC is vested with the exclusive responsibility for upstream and downstream development, which entails exploiting, refining, and marketing Nigeria’s petroleum products.

Today, through its subsidiary Products and Pipelines Marketing Company, the NNPC owns and operates 5,120 km of pipelines in Nigeria, which includes 4,315 km of multi-product pipelines and 666 km of crude oil pipeline.

NNPC subsidiary Nigerian Gas Company (NGC) operates 1,100 km of gas pipelines, with diameters between 4 and 36 inches. This system has a total transport capacity of more than 2 Bcf/d, as well as 14 compressor stations and 13metering stations. Currently, the Escravos to Lagos Pipeline System (ELPS), which was completed in the 1990s, is the main pipeline system for Nigeria's domestic gas consumption.

Domestic pipeline projects

The NNPC is developing several new domestic pipelines. A 48 inch diameter pipeline has been proposed to transport gas to central and northern Nigeria, from Ajaokuta to Abuja to Kaduna, a distance of approximately 550 km. The project is expected to cost $US745 million. The approximately 400 km Aba – Enugu – Gboko Pipeline has been proposed to deliver natural gas to the eastern region of the country. The pipeline is expected to cost $US552 million.

In February 2010, construction commenced on a 500 MW gas power plant at the Qua Iboe Terminal in Akwa Ibom State. This project will include a 56 km transmission pipeline connecting to the national grid at Ikot Abasi.

A current priority of the NNPC is the replacement of its domestic pipeline network. Most of the network is 15 to 20 years old, making it vulnerable to corrosion and leakage. Also, the oil pipeline on the coast of Lagos is now exposed to the surface due to erosion along the coastline. Other pipelines were originally laid above ground level, further necessitating replacement.

In addition, the NGC plans to integrate all gas transmission systems in the country, creating the Trans Nigerian Pipeline. It is also planned that extensions of the systems would be made to the far northern states of Borno and Sokoto as well as to the central industrial state of Kano.

An NNPC spokesperson said “The resulting interconnected system would provide full flexibility and better management of adjustment of supply and demand throughout the country.”

Pipeline vandalism has been an ongoing problem in Nigeria over the past decade. At a presentation made to government officials in March, former NNPC Group Managing Director Dr Sanusi Barkindo reported that there had been a total of 16,083 incidents affecting pipeline operations over the last ten years, 97.5 per cent of which were due to the activities of vandals. In total, this has led to product losses and repairs worth $US1.2 billion.

“Vandalisation of oil and gas pipeline facilities remains the single most critical challenge facing our industry. The amnesty policy of government appears to be working but some criminal elements are still at work,” Dr Barkindo said.

NNPC is taking action to halt the impact of vandals. New and replacement pipelines are being installed at much greater depths than the existing network, beyond the reach of potential vandals or other threats. The introduction of electronic devices and armed personnel is also being considered to protect Nigeria’s pipelines.

International gas pipelines

In the international arena, the NNPC has a major interest in the West African Gas Pipeline (WAGP), which transports gas from Nigeria to consumers in Benin, Togo and Ghana. The 620 km offshore and onshore pipeline is owned and operated by the West African Gas Pipeline Company, in which the NNPC has a 25 per cent share. Other key shareholders include Chevron with 36.7 per cent, Shell Overseas Holdings with 18 per cent, and Takoradi Power Company (Ghana) with 16.3 per cent.

The onshore section of the pipeline is 30 inches in diameter, while the diameter of the offshore section is 20 inches.

Willbros began construction on the pipeline in 2005, and the pipeline was commissioned in the first quarter of 2010. There is also some interest in expanding the pipeline further west to the Cote d’Ivoire.

Following the completion of the WAGP, the NNPC has turned its attention to the proposed Trans-Saharan Gas Pipeline (TSGP). The TSGP will supply Nigerian gas to European consumers, and is intended to enhance the economic and political stability of the Nigerian region, while helping to alleviate the anticipated shortfall of gas supply in Europe.

The project was conceived under the New Partners for African Development (NEPAD) Initiative developed by the Presidents of Nigeria, South Africa, Algeria and Senegal, and the pipeline is to be constructed and operated by the NNPC and Algerian company Sonatrach. In May 2005, the NNPC and Sonatrach contracted UK-based Penspen to provide a feasibility study for the pipeline, while in July 2009, Nigeria signed an intergovernmental agreement with Niger and Algeria to move ahead with construction. The project is expected to take a further five to six years to complete, with commissioning scheduled for 2015.

The TSGP will transport natural gas 4,300 km from oil and gas fields in the Delta region of Nigeria, to Algeria’s Beni Saf export terminal on the Mediterranean. The gas will then enter a subsea pipeline which will cross the Mediterranean and connect with gas distribution systems in Spain. The pipeline will have ten compression stations, and an anticipated transport capacity of 30 Bcm/a.

In total, the project is expected to cost approximately $US12 billion. The European Union’s Energy Commissioner Andris Piebalgs has said that the EU may provide funding for the pipeline, as it is in the interest of European energy security.

Several major international energy companies have expressed interest in participating in the TSGP, including Indian company GAIL, French-based Total, Royal Dutch Shell and Italian firm Eni. In mid-2009, Russian energy giant Gazprom formed a joint venture with the NNPC to construct the Nigerian section of the TSGP, estimated to cost $US400–500 million. The Nigerian section of the pipeline will be 1,037 km in length, while 841 km will be constructed in Niger and 2,310 km will traverse Algeria.

Building the future of the Nigerian energy industry

The NNPC is committed to creating and maintaining a local talent pool of petroleum and gas professionals. According to NNPC Group Learning Division General Manager Chris Osarumwense, the key issue for this sector is not material resources but human resources. “Where are the engineers and geoscientists of the future going to come from?” he said.

The company has introduced a fast-track accelerated development process and coaching, mentoring and leadership development programs, as well as dedicated career planning.

Mr Osarumwense said “Building a local talent pool is a strategic imperative for the Nigerian oil and gas industry, and it needs collaborative and creative solutions.

“We need to build a global talent pipeline for this industry. We need to invest in local institutions for people development and facilitate knowledge transfer for sustainable localisation for countries where educational institutions may not have been as good as was needed.”