Nigerian Oil Pipeline Law Is Called a ‘Time Bomb’ for Communities
(Bloomberg) -- Nigerian legislation overhauling the oil and gas industry could cause conflict in crude-producing communities that fear footing the bill for breakages to pipelines.
President Muhammadu Buhari signed the so-called Petroleum Industry Act into law in August. The long-awaited reforms that were almost two decades in the making compel producers to set aside the equivalent of 3% of the previous year’s operating expenditure for the development of the areas in the Niger Delta region that host their operations.
The law also has a clause that says the cost of repairing oil facilities damaged by acts of “vandalism, sabotage or other civil unrest” will be deducted from the communities’ trust funds.
The provision could “provoke crisis” by causing communities to “go after” those suspected of interfering with pipelines, Fyneface Dumnamene Fyneface, the executive director of the Youths and Environmental Advocacy Centre, a non-governmental organization, said. Making the local population’s funding from oil companies dependent on defending their infrastructure “is a time bomb,” he said.
“We are not police, we are not security agents, we are not supposed to protect the pipelines,” Anabs Sara-Igbe, the traditional ruler of a kingdom in the southern Rivers state, said in an interview.
Africa’s largest oil producer lost at least 31 million barrels to pipeline theft and vandalism in 2019, according to the Nigerian chapter of the Extractive Industries Transparency Initiative. Earlier this year, the head of the country’s state-owned energy company said the rate was more than twice as high.
Onshore and shallow water production is increasingly carried out by Nigerian firms, which have been buying assets from international majors such as Royal Dutch Shell Plc and Chevron Corp. for more than a decade.
The infrastructure is vulnerable to theft and tampering because “most of the pipes are corroded,” Sara-Igbe, said
©2021 Bloomberg L.P.