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New Nigeria pipelines to be funded by transport tariff

Published by , Senior Editor
World Pipelines,

The Nigerian National Petroleum Corporation (NNPC) has indicated that up to 1000 km of new gas pipelines that would be added to Nigeria’s gas line network would be funded through a new framework of contractor financing and then their construction costs paid off through agreed transportation tariff.

Speaking at the recent 2017 conference and annual general meeting of the Nigerian Society of Engineers (NSE) in Abuja, the Group Managing Director of the NNPC, Dr. Maikanti Baru, explained that the corporation has completed and commissioned about 500 km of gas pipelines between 2010 and 2017.

Baru said the exercise was part of its aggressive plan to expand Nigeria’s gas pipeline infrastructure, and bring more industries to connect to gas as fuel for their various productions.

He noted that the accelerated expansion of the gas pipeline system took off from the directive of the then President Olusegun Obasanjo, to the oil companies in the country to support the government’s power generation effort, and continued until gas-based power generation plants began to contribute up to 70% of Nigeria’s daily power generation.

Providing details of the planned expansion of the country’s gas infrastructure, he said the network would be bolstered with the completion of the 127 km East-West OB3 gas pipeline which would join Oben to Obiafu-Obrikom by 4Q18, and the 363 km looping expansion of Escravos-Lagos Gas Pipeline System expected for delivery by 1Q18.

He said the Engineering, Procurement and Construction (EPC) tender evaluation process for 683 km Ajaokuta-Abuja-Kaduna-Kano gas pipeline contract, and that of the Qua Iboe Terminal to Obiafu/Obrikom (QIT-Ob/Ob gas pipeline) were ongoing.

“Upon completion, the remaining projects are expected to add over 1000 km to the nation’s gas pipeline network,” said Baru.

On funding, he said the NNPC would adopt Public Private Partnership (PPP) models in building and expanding the gas infrastructures, starting with the Ajaokuta–Abuja-Kaduna–Kano (AKK) gas lines which would be built through contractor financing model, with the selected contractors providing the funds for its construction and then recover it through transportation tariff.

Nigeria’s daily crude oil export is set to receive a boost as the Amukpe-Escravos Pipeline Project, a joint venture (JV) of the Nigerian National Petroleum Corporation (NNPC) and Pan Ocean Oil Corporation is scheduled to come on stream early next year. The project will increase crude export by 160 000 bpd.

According to the Chairman of Pan Ocean, Dr. Festus Fadeyi, the pipeline is going to be a major export line. “This great achievement means that Pan Ocean has an alternative line to export her crude and create an opportunity for others who have been using Trans Forcados Pipeline to export their crude without disruption. This project will help the country to continue to export crude oil and keep the economy alive,” he stated.

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