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Nigeria Looks To Run Oil Pipeline Vandals Out Of Business

Nigeria’s National Petroleum Corporation has teamed up with a state security company to improve the safety of oil pipelines, The Guardian reports, citing officials from the two companies.

The NNPC and the Nigeria Security and Civil Defence Corps will implement a new, performance-based pipeline protection system to cut down on vandalism and oil theft, which have plagued the local oil industry for decades and have been responsible in part for the excessive spills and leaks in the Niger Delta.

While the two did not go into details about what this system would involve, officials from both NNPC and NSCDC said the ultimate goal of the joint undertaking was to drive oil thieves and vandals out of business.

Leaks in pipelines criss-crossing the Niger Delta are often caused by oil theft and field operators have frequently declared force majeure on exports of key Nigerian crude grades. This has hurt exports and oil revenues, which has been particularly hard on the Nigerian budget during the latest price crisis.

Pipeline vandalism has also aggravated the hostility of local communities towards the oil companies, who they’ve blamed for not creating enough jobs for the locals. This hostility in turn has been linked to the surge in militant activity in the area, which led to pipeline and export terminal bombings, and, ultimately, more force majeure closures.

All this has hurt Nigeria’s plans of raising oil production despite the ongoing OPEC-wide cuts. Still, earlier this year Petroleum Minister Emmanuel Ibe Kachikwu boasted a fall in production costs to US$23 per barrel, with plans to lower them further to as little as US$15 a barrel.

This week, the managing director of NNPC said the company planned to boost national production from below 2 million bpd to 3 million bpd by 2023. For this, Nigeria would need the help of foreign investors, and foreign investors would need assurances that their investments are secure. This is what likely prompted the pipeline security plans of NNPC and NSCDC.

By Irina Slav for Oilprice.com

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