DOWNLOAD THE FULL PROJECT

1239 Users found this project useful

THE EFFECT OF PIPELINE VITALIZATION IN NIGERIA: PROBLEM AND SOLUTION

CHAPTER ONE

1.0           INTRODUCTION

The Nigerian petroleum industry which has majority of its establishment within the Niger Delta Region has been confronted by two sapping challenges over the years. The challenges relates to the prevalence of militancy and oil pipeline vandalism in the Niger Delta. While the former has significantly attenuated in the aftermath of the Amnesty deal in 2009 (Okoli, 2013), the latter appears to have escalated both in incidence and impact. Vandalisation of oil and gas pipeline facilities remains the single most critical challenge facing our industry. (Dr. M.S. Barkindo (2010), NNPC General Managing Director).

According to Ogbeni: A total of 16,083 pipeline breaks were recorded within the last 10 years adding that while 398 pipeline breaks representing 2.4 percent were due to ruptures, the activities of unpatriotic vandals accounted for 15, 685 breaks which translated to about 97.5 percent of the total number of cases (Ogbeni, 2012, para 8). Indeed, the incidence of oil pipeline vandalism has been on the rise in Nigeria. This is particularly so because oil is the live wire of the Nigerian state and economy. Indeed, oil is the mainstay of the Nigerian economy and the country relies heavily on revenue from crude. For example, oil provides 20% of the country’s GDP and 65% of its budgetary revenue (CIA, 2007).

According to the 2013 annual report of the Nigerian Extractive Industry Transparency Initiative (NEITI), Nigeria lost a total of 10.9billion US Dollars to oil theft between 2009 and 2011 (NEITI, 2013; Onoja, 2013). This loss adumbrates the significance of vandalism as a veritable problem in the Nigerian oil industry.

Pipeline which still remains as one of the most reliable and best means of transporting petroleum products are occasionally subjected to third party damage. This damage is the single largest cause of pipeline failure from history. In most developing countries of the world like Nigeria, this damage is mainly due to the act of vandalism and terrorist attacks. In Nigeria, a combined team of Petroleum Pipeline Marketing Company an arm of the government, Community leaders, Police and indigenes provide surveillance to guard the pipelines. Regular aerial surveillance of critical sections of the pipelines is also carried out. Despite all these security measures, vandalisation of petroleum pipelines is increasing and a single incident can be devastating, causing death and millions of dollars in property loss.

With proven reserves of crude oil and natural gas lasting for another 200 years, Nigeria hasthe ninth largest proven reserves in the world and the largest in Africa.1 This comes “hot on the heels” of the oil and gas sector accounting for over 97% of the country’s foreign exchange earnings and 85% of the country’s gross domestic product.2 The importance of the oil and gas sector cannot be over-emphasised. At the centre of this industry is the need to explore for, develop, produce and transport all discovered oil and gas mineralsfrom remote parts of Nigeria’s Niger Delta region, which “harbours” the country’s oil and gas deposits through pipelines constructed in