Niger–Kaduna crude oil pipeline to cost $1bn

An estimated $1 billion would be required to construct the proposed 1,000-kilometre crude oil pipeline from Agadam in Niger Republic to Nigeria’s Kaduna Refinery and Petrochemical Company in Kaduna State.

The standard cost for laying a pipeline is $1 million per kilometre, while distance and terrain are key determinants in cost, said Dolapo Oni, head of energy research at Ecobank.

“Terrain could also affect distance because the pipeline may have to bypass some rocks, water bodies, and heritage sites,” and this could translate to an even higher cost for building the pipeline, Oni said via his twitter handle in response to questions.

Experts add that the cost of feasibility studies and other anciliary activities could further take the cost of the pipeline to $2 billion, should the Federal Government see through the proposal.

Babajide Soyode, former general manger of Warri Refinery and Petrochemicals, said the project is realistic and strategic.

“It is not good for a refinery to have just one source of crude supply,” Soyode said by phone, “The problem we have with our refineries is because they have just one source of supply and once that supply line is cut off, we run into trouble.”

Soyode added that those who buy Nigeria’s crude oil also buy from other sources across the world and take them to their refineries; hence it makes sense if the Kaduna Refinery gets supply from Niger Republic.

Maikanti Baru, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) had said that the corporation was exploring the possibility of piping crude oil from Niger Republic for refining in Kaduna.

Baru, in a visit to the Kaduna Refining & Petrochemical Company Limited in Kaduna State, said high level contacts have been made by Nigeria’s President Muhammadu Buhari with Niger Republic, on the possibility of importing crude from that country.

However, sources familiar with the matter are skeptical of the proposal, given government’s track record of misappropriation of funds.

But Ndu Ughamadu, the group general manager, public affairs, at NNPC, told BusinessDay that the project is still at preliminary proposal stage.

Ughamadu said that the pipeline is expected to bring heavy crude from Niger Republic, which is usually imported to the country from Saudi Arabia, for blending purposes at the Kaduna Refinery.

According to him, if the proposal gets the nod of the Federal Government, heavy crude and other grades of crude to Niger Republic would be used to blend the ones coming -in country.

Attacks on the crude pipelines, which supply the refinery, prompted the NNPC to halt crude flows to its refineries in Kaduna, Port Harcourt and Warri.

Nigeria’s crude production, which was 2.1 million barrels per day (bpd) at the start of 2016, fell by around a third in the summer, following a series of attacks, since January, by Niger-Delta militants who want a greater share of the country’s energy wealth to go to the impoverished southern oil-producing region.

Inspite of the declining economic fortunes, Nigeria spent N595.5 billion on the importation of fuel in the first six months of 2016, rising by N34.3 billion from the amount spent in the last six months of 2015.

According to the National Bureau of Statistics (NBS) Nigeria spent N276.226 billion on petrol imports in the first quarter of 2016, while N319.28 billion was spent in the second quarter.

The NBS report showed that the amount spent on fuel importation appreciated by 6.1 percent, compared with N561.2 billion spent in the second half of 2015.

 

OLUSOLA BELLO & LOLADE AKINMURELE